Correlation Between GOME Retail and Zions Bancorporation

Can any of the company-specific risk be diversified away by investing in both GOME Retail and Zions Bancorporation at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining GOME Retail and Zions Bancorporation into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GOME Retail Holdings and Zions Bancorporation National, you can compare the effects of market volatilities on GOME Retail and Zions Bancorporation and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in GOME Retail with a short position of Zions Bancorporation. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOME Retail and Zions Bancorporation.

Diversification Opportunities for GOME Retail and Zions Bancorporation

-0.39

Correlation Coefficient

GOME Retail  Zions Bancorporation

Very good diversification

The 3 months correlation between GOME and Zions is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding GOME Retail Holdings and Zions Bancorp. National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zions Bancorporation and GOME Retail is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on GOME Retail Holdings are associated (or correlated) with Zions Bancorporation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zions Bancorporation has no effect on the direction of GOME Retail i.e., GOME Retail and Zions Bancorporation go up and down completely randomly.

Pair Corralation between GOME Retail and Zions Bancorporation

Assuming the 90 days trading horizon GOME Retail is expected to generate 1.29 times less return on investment than Zions Bancorporation. In addition to that, GOME Retail is 4.91 times more volatile than Zions Bancorporation National. It trades about 0.01 of its total potential returns per unit of risk. Zions Bancorporation National is currently generating about 0.08 per unit of volatility. If you would invest  3,367  in Zions Bancorporation National on September 28, 2024 and sell it today you would earn a total of  1,782  from holding Zions Bancorporation National or generate 52.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

GOME Retail Holdings  vs.  Zions Bancorp. National

GOME Retail Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GOME Retail Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Zions Bancorporation

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zions Bancorporation National are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Zions Bancorporation reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GOME Retail and Zions Bancorporation

The main advantage of trading using opposite GOME Retail and Zions Bancorporation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOME Retail position performs unexpectedly, Zions Bancorporation can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Zions Bancorporation will offset losses from the drop in Zions Bancorporation's long position.

The idea behind GOME Retail Holdings and Zions Bancorporation National pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Content Syndication module to quickly integrate customizable finance content to your own investment portal.