Correlation Between Carters and Zumiez
Can any of the company-specific risk be diversified away by investing in both Carters 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 Carters and Zumiez into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carters and Zumiez Inc, you can compare the effects of market volatilities on Carters 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 Carters with a short position of Zumiez. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carters and Zumiez.
Diversification Opportunities for Carters and Zumiez
Modest diversification
The 3 months correlation between Carters and Zumiez is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Carters and Zumiez Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zumiez Inc and Carters 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 Carters 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 Carters i.e., Carters and Zumiez go up and down completely randomly.
Pair Corralation between Carters and Zumiez
Considering the 90-day investment horizon Carters is expected to under-perform the Zumiez. But the stock apears to be less risky and, when comparing its historical volatility, Carters is 1.64 times less risky than Zumiez. The stock trades about -0.01 of its potential returns per unit of risk. The Zumiez Inc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2,201 in Zumiez Inc on September 24, 2024 and sell it today you would lose (293.00) from holding Zumiez Inc or give up 13.31% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Carters vs. Zumiez Inc
Performance |
Timeline |
Carters |
Zumiez Inc |
Carters and Zumiez Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Carters and Zumiez
The main advantage of trading using opposite Carters and Zumiez positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carters 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.Carters vs. Amer Sports, | Carters vs. Brunswick | Carters vs. BRP Inc | Carters vs. Vision Marine Technologies |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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