Correlation Between Zions Bancorporation and Webster Financial

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

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

Diversification Opportunities for Zions Bancorporation and Webster Financial

0.88

Correlation Coefficient

Zions Bancorporation  Webster Financial

Very poor diversification

The 3 months correlation between Zions and Webster is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Zions Bancorp. and Webster Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Webster Financial 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 Webster Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Webster Financial has no effect on the direction of Zions Bancorporation i.e., Zions Bancorporation and Webster Financial go up and down completely randomly.

Pair Corralation between Zions Bancorporation and Webster Financial

Given the investment horizon of 90 days Zions Bancorporation is expected to generate 10.68 times less return on investment than Webster Financial. In addition to that, Zions Bancorporation is 1.33 times more volatile than Webster Financial. It trades about 0.0 of its total potential returns per unit of risk. Webster Financial is currently generating about 0.03 per unit of volatility. If you would invest  6,079  in Webster Financial on September 9, 2025 and sell it today you would earn a total of  170.00  from holding Webster Financial or generate 2.8% return on investment over 90 days.

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

Zions Bancorp.  vs.  Webster Financial

Zions Bancorporation

Risk-Adjusted Performance

Weakest

Over the last 90 days Zions Bancorporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Zions Bancorporation is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Webster Financial

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Webster Financial are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, Webster Financial is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Zions Bancorporation and Webster Financial

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

The idea behind Zions Bancorporation and Webster Financial 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.