Correlation Between Hill Street and Zevia Pbc

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

By analyzing existing cross correlation between Hill Street Beverage and Zevia Pbc, you can compare the effects of market volatilities on Hill Street and Zevia Pbc 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 Hill Street with a short position of Zevia Pbc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hill Street and Zevia Pbc.

Diversification Opportunities for Hill Street and Zevia Pbc

0.32

Correlation Coefficient

Hill Street  Zevia Pbc

Weak diversification

The 3 months correlation between Hill and Zevia is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Hill Street Beverage and Zevia Pbc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zevia Pbc and Hill Street 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 Hill Street Beverage are associated (or correlated) with Zevia Pbc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zevia Pbc has no effect on the direction of Hill Street i.e., Hill Street and Zevia Pbc go up and down completely randomly.

Pair Corralation between Hill Street and Zevia Pbc

Assuming the 90 days horizon Hill Street Beverage is expected to generate 3.16 times more return on investment than Zevia Pbc. However, Hill Street is 3.16 times more volatile than Zevia Pbc. It trades about 0.06 of its potential returns per unit of risk. Zevia Pbc is currently generating about -0.13 per unit of risk. If you would invest  30.00  in Hill Street Beverage on December 28, 2024 and sell it today you would lose (7.00) from holding Hill Street Beverage or give up 23.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Hill Street Beverage  vs.  Zevia Pbc

Hill Street Beverage

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hill Street Beverage are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, Hill Street reported solid returns over the last few months and may actually be approaching a breakup point.

Zevia Pbc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zevia Pbc 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 forward indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Hill Street and Zevia Pbc

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

The idea behind Hill Street Beverage and Zevia Pbc 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.