Correlation Between Reitmans and Zumiez

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

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

Diversification Opportunities for Reitmans and Zumiez

0.52

Correlation Coefficient

Reitmans  Zumiez

Very weak diversification

The 3 months correlation between Reitmans and Zumiez is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Reitmans Limited and Zumiez Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zumiez Inc and Reitmans 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 Reitmans Limited 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 Reitmans i.e., Reitmans and Zumiez go up and down completely randomly.

Pair Corralation between Reitmans and Zumiez

Assuming the 90 days horizon Reitmans Limited is expected to under-perform the Zumiez. But the pink sheet apears to be less risky and, when comparing its historical volatility, Reitmans Limited is 1.63 times less risky than Zumiez. The pink sheet trades about -0.02 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  2,020  in Zumiez Inc on September 28, 2024 and sell it today you would lose (35.00) from holding Zumiez Inc or give up 1.73% of portfolio value over 90 days.

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

Reitmans Limited  vs.  Zumiez Inc

Reitmans Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Reitmans Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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.

Pair Trading with Reitmans and Zumiez

The main advantage of trading using opposite Reitmans and Zumiez positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reitmans 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 Reitmans Limited 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.