Correlation Between Zumiez and MASSMU

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

By analyzing existing cross correlation between Zumiez Inc and MASSMU 5672 01 DEC 52, you can compare the effects of market volatilities on Zumiez and MASSMU 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 MASSMU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zumiez and MASSMU.

Diversification Opportunities for Zumiez and MASSMU

0.05

Correlation Coefficient

Zumiez  MASSMU

Significant diversification

The 3 months correlation between Zumiez and MASSMU is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Zumiez Inc and MASSMU 5672 01 DEC 52 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MASSMU 5672 01 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 MASSMU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MASSMU 5672 01 has no effect on the direction of Zumiez i.e., Zumiez and MASSMU go up and down completely randomly.

Pair Corralation between Zumiez and MASSMU

Given the investment horizon of 90 days Zumiez Inc is expected to under-perform the MASSMU. In addition to that, Zumiez is 1.45 times more volatile than MASSMU 5672 01 DEC 52. It trades about -0.02 of its total potential returns per unit of risk. MASSMU 5672 01 DEC 52 is currently generating about 0.02 per unit of volatility. If you would invest  10,312  in MASSMU 5672 01 DEC 52 on September 28, 2024 and sell it today you would earn a total of  87.00  from holding MASSMU 5672 01 DEC 52 or generate 0.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	46.77%
Values	Daily Returns

Zumiez Inc  vs.  MASSMU 5672 01 DEC 52

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 fairly strong primary indicators, Zumiez is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

MASSMU 5672 01

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MASSMU 5672 01 DEC 52 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, MASSMU is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Zumiez and MASSMU

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

The idea behind Zumiez Inc and MASSMU 5672 01 DEC 52 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 Global Correlations module to find global opportunities by holding instruments from different markets.