Correlation Between Zions Bancorporation and Bank7 Corp

Can any of the company-specific risk be diversified away by investing in both Zions Bancorporation and Bank7 Corp 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 Bank7 Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Zions Bancorporation and Bank7 Corp, you can compare the effects of market volatilities on Zions Bancorporation and Bank7 Corp 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 Bank7 Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zions Bancorporation and Bank7 Corp.

Diversification Opportunities for Zions Bancorporation and Bank7 Corp

0.96

Correlation Coefficient

Zions Bancorporation  Bank7 Corp

Almost no diversification

The 3 months correlation between Zions and Bank7 is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Zions Bancorp. and Bank7 Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank7 Corp 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 Bank7 Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank7 Corp has no effect on the direction of Zions Bancorporation i.e., Zions Bancorporation and Bank7 Corp go up and down completely randomly.

Pair Corralation between Zions Bancorporation and Bank7 Corp

Given the investment horizon of 90 days Zions Bancorporation is expected to under-perform the Bank7 Corp. But the stock apears to be less risky and, when comparing its historical volatility, Zions Bancorporation is 1.05 times less risky than Bank7 Corp. The stock trades about -0.14 of its potential returns per unit of risk. The Bank7 Corp is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  4,651  in Bank7 Corp on September 16, 2024 and sell it today you would lose (135.00) from holding Bank7 Corp or give up 2.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Zions Bancorp.  vs.  Bank7 Corp

Zions Bancorporation

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zions Bancorporation are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Zions Bancorporation displayed solid returns over the last few months and may actually be approaching a breakup point.

Bank7 Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank7 Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Bank7 Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zions Bancorporation and Bank7 Corp

The main advantage of trading using opposite Zions Bancorporation and Bank7 Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zions Bancorporation position performs unexpectedly, Bank7 Corp 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 Bank7 Corp will offset losses from the drop in Bank7 Corp's long position.

The idea behind Zions Bancorporation and Bank7 Corp 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.