Correlation Between Founder Group and Zumiez

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

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

Diversification Opportunities for Founder Group and Zumiez

-0.12

Correlation Coefficient

Founder Group  Zumiez

Good diversification

The 3 months correlation between Founder and Zumiez is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Founder Group Limited and Zumiez Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zumiez Inc and Founder Group 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 Founder Group Limited are associated (or correlated) with Zumiez. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zumiez Inc has no effect on the direction of Founder Group i.e., Founder Group and Zumiez go up and down completely randomly.

Pair Corralation between Founder Group and Zumiez

Considering the 90-day investment horizon Founder Group Limited is expected to generate 4.38 times more return on investment than Zumiez. However, Founder Group is 4.38 times more volatile than Zumiez Inc. It trades about 0.02 of its potential returns per unit of risk. Zumiez Inc is currently generating about -0.17 per unit of risk. If you would invest  220.00  in Founder Group Limited on September 23, 2024 and sell it today you would lose (49.00) from holding Founder Group Limited or give up 22.27% of portfolio value over 90 days.

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

Founder Group Limited  vs.  Zumiez Inc

Founder Group Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Founder Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Zumiez Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zumiez Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Founder Group and Zumiez

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

The idea behind Founder Group Limited and Zumiez Inc 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.