Correlation Between Zions Bancorporation and AIB Group

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

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

Diversification Opportunities for Zions Bancorporation and AIB Group

0.22

Correlation Coefficient

Zions Bancorporation  AIB Group

Modest diversification

The 3 months correlation between Zions and AIB is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Zions Bancorp. and AIB Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIB Group PLC and Zions Bancorporation 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 Zions Bancorporation are associated (or correlated) with AIB Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIB Group PLC has no effect on the direction of Zions Bancorporation i.e., Zions Bancorporation and AIB Group go up and down completely randomly.

Pair Corralation between Zions Bancorporation and AIB Group

If you would invest  4,829  in Zions Bancorporation on September 3, 2024 and sell it today you would earn a total of  1,223  from holding Zions Bancorporation or generate 25.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Zions Bancorp.  vs.  AIB Group PLC

Zions Bancorporation

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zions Bancorporation are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Zions Bancorporation displayed solid returns over the last few months and may actually be approaching a breakup point.

AIB Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AIB Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, AIB Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Zions Bancorporation and AIB Group

The main advantage of trading using opposite Zions Bancorporation and AIB Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zions Bancorporation position performs unexpectedly, AIB Group 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 AIB Group will offset losses from the drop in AIB Group's long position.

The idea behind Zions Bancorporation and AIB Group PLC 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..