Correlation Between Zumiez and Founder Group

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

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

Diversification Opportunities for Zumiez and Founder Group

-0.12

Correlation Coefficient

Zumiez  Founder Group

Good diversification

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

Pair Corralation between Zumiez and Founder Group

Given the investment horizon of 90 days Zumiez Inc is expected to generate 0.19 times more return on investment than Founder Group. However, Zumiez Inc is 5.39 times less risky than Founder Group. It trades about 0.02 of its potential returns per unit of risk. Founder Group Limited is currently generating about -0.02 per unit of risk. If you would invest  1,837  in Zumiez Inc on September 23, 2024 and sell it today you would earn a total of  62.00  from holding Zumiez Inc or generate 3.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	15.93%
Values	Daily Returns

Zumiez Inc  vs.  Founder Group Limited

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.

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.

Pair Trading with Zumiez and Founder Group

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

The idea behind Zumiez Inc and Founder Group Limited 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.

Check out your portfolio center.

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.