Correlation Between LG Display and Zumiez

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

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

Diversification Opportunities for LG Display and Zumiez

0.47

Correlation Coefficient

LG Display  Zumiez

Very weak diversification

The 3 months correlation between LPL and Zumiez is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Zumiez Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zumiez Inc and LG Display 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 LG Display Co 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 LG Display i.e., LG Display and Zumiez go up and down completely randomly.

Pair Corralation between LG Display and Zumiez

Considering the 90-day investment horizon LG Display Co is expected to generate 0.53 times more return on investment than Zumiez. However, LG Display Co is 1.89 times less risky than Zumiez. It trades about -0.15 of its potential returns per unit of risk. Zumiez Inc is currently generating about -0.2 per unit of risk. If you would invest  342.00  in LG Display Co on October 25, 2024 and sell it today you would lose (21.00) from holding LG Display Co or give up 6.14% of portfolio value over 90 days.

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

LG Display Co  vs.  Zumiez Inc

LG Display

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LG Display Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

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 inconsistent performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with LG Display and Zumiez

The main advantage of trading using opposite LG Display and Zumiez positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display 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.

The idea behind LG Display Co and Zumiez Inc 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.