Correlation Between Zumiez and Centessa Pharmaceuticals

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

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

Diversification Opportunities for Zumiez and Centessa Pharmaceuticals

0.04

Correlation Coefficient

Zumiez  Centessa Pharmaceuticals

Significant diversification

The 3 months correlation between Zumiez and Centessa is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Zumiez Inc and Centessa Pharmaceuticals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centessa Pharmaceuticals and Zumiez 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 Zumiez Inc are associated (or correlated) with Centessa Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centessa Pharmaceuticals has no effect on the direction of Zumiez i.e., Zumiez and Centessa Pharmaceuticals go up and down completely randomly.

Pair Corralation between Zumiez and Centessa Pharmaceuticals

Given the investment horizon of 90 days Zumiez Inc is expected to under-perform the Centessa Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Zumiez Inc is 1.01 times less risky than Centessa Pharmaceuticals. The stock trades about -0.04 of its potential returns per unit of risk. The Centessa Pharmaceuticals PLC is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,534  in Centessa Pharmaceuticals PLC on September 25, 2024 and sell it today you would earn a total of  219.00  from holding Centessa Pharmaceuticals PLC or generate 14.28% return on investment over 90 days.

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

Zumiez Inc  vs.  Centessa Pharmaceuticals PLC

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.

Centessa Pharmaceuticals

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Centessa Pharmaceuticals PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Centessa Pharmaceuticals sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zumiez and Centessa Pharmaceuticals

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

The idea behind Zumiez Inc and Centessa Pharmaceuticals 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 Transaction History module to view history of all your transactions and understand their impact on performance.