Correlation Between First Trust and Zions Bancorporation

Can any of the company-specific risk be diversified away by investing in both First Trust 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 First Trust and Zions Bancorporation into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between First Trust Enhanced and Zions Bancorporation NA, you can compare the effects of market volatilities on First Trust 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 First Trust with a short position of Zions Bancorporation. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Zions Bancorporation.

Diversification Opportunities for First Trust and Zions Bancorporation

-0.38

Correlation Coefficient

First Trust  Zions Bancorporation

Very good diversification

The 3 months correlation between First and Zions is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Enhanced and Zions Bancorp. NA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zions Bancorporation and First Trust 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 First Trust Enhanced 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 First Trust i.e., First Trust and Zions Bancorporation go up and down completely randomly.

Pair Corralation between First Trust and Zions Bancorporation

Considering the 90-day investment horizon First Trust Enhanced is expected to generate 1.89 times more return on investment than Zions Bancorporation. However, First Trust is 1.89 times more volatile than Zions Bancorporation NA. It trades about 0.15 of its potential returns per unit of risk. Zions Bancorporation NA is currently generating about -0.06 per unit of risk. If you would invest  1,992  in First Trust Enhanced on September 17, 2024 and sell it today you would earn a total of  118.50  from holding First Trust Enhanced or generate 5.95% return on investment over 90 days.

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

First Trust Enhanced  vs.  Zions Bancorp. NA

First Trust Enhanced

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Enhanced are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, First Trust is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Zions Bancorporation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zions Bancorporation NA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Zions Bancorporation is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with First Trust and Zions Bancorporation

The main advantage of trading using opposite First Trust and Zions Bancorporation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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 First Trust Enhanced and Zions Bancorporation NA 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.