Correlation Between RiverNorth Specialty and Zions Bancorporation

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

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

Diversification Opportunities for RiverNorth Specialty and Zions Bancorporation

-0.27

Correlation Coefficient

RiverNorth Specialty  Zions Bancorporation

Very good diversification

The 3 months correlation between RiverNorth and Zions is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding RiverNorth Specialty Finance and Zions Bancorp. NA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zions Bancorporation and RiverNorth Specialty 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 RiverNorth Specialty Finance 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 RiverNorth Specialty i.e., RiverNorth Specialty and Zions Bancorporation go up and down completely randomly.

Pair Corralation between RiverNorth Specialty and Zions Bancorporation

Considering the 90-day investment horizon RiverNorth Specialty Finance is expected to generate 2.92 times more return on investment than Zions Bancorporation. However, RiverNorth Specialty is 2.92 times more volatile than Zions Bancorporation NA. It trades about 0.35 of its potential returns per unit of risk. Zions Bancorporation NA is currently generating about 0.1 per unit of risk. If you would invest  1,506  in RiverNorth Specialty Finance on September 17, 2024 and sell it today you would earn a total of  37.50  from holding RiverNorth Specialty Finance or generate 2.49% return on investment over 90 days.

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

RiverNorth Specialty Finance  vs.  Zions Bancorp. NA

RiverNorth Specialty

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RiverNorth Specialty Finance are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, RiverNorth Specialty is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

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 RiverNorth Specialty and Zions Bancorporation

The main advantage of trading using opposite RiverNorth Specialty and Zions Bancorporation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RiverNorth Specialty 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 RiverNorth Specialty Finance 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.