Correlation Between Retail Food and Zip Co

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

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

Diversification Opportunities for Retail Food and Zip Co

0.51

Correlation Coefficient

Retail Food  Zip Co

Very weak diversification

The 3 months correlation between Retail and Zip is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Retail Food Group and Zip Co Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zip Co Limited and Retail Food 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 Retail Food Group are associated (or correlated) with Zip Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zip Co Limited has no effect on the direction of Retail Food i.e., Retail Food and Zip Co go up and down completely randomly.

Pair Corralation between Retail Food and Zip Co

Assuming the 90 days trading horizon Retail Food Group is expected to under-perform the Zip Co. But the stock apears to be less risky and, when comparing its historical volatility, Retail Food Group is 1.52 times less risky than Zip Co. The stock trades about -0.38 of its potential returns per unit of risk. The Zip Co Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  296.00  in Zip Co Limited on October 23, 2024 and sell it today you would earn a total of  5.00  from holding Zip Co Limited or generate 1.69% return on investment over 90 days.

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

Retail Food Group  vs.  Zip Co Limited

Retail Food Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Retail Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Zip Co Limited

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Zip Co Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Zip Co may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Retail Food and Zip Co

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

The idea behind Retail Food Group and Zip Co 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.