Correlation Between VHAI and Zumiez

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

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

Diversification Opportunities for VHAI and Zumiez

0.49

Correlation Coefficient

VHAI  Zumiez

Very weak diversification

The 3 months correlation between VHAI and Zumiez is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding VHAI and Zumiez Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zumiez Inc and VHAI 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 VHAI 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 VHAI i.e., VHAI and Zumiez go up and down completely randomly.

Pair Corralation between VHAI and Zumiez

Given the investment horizon of 90 days VHAI is expected to under-perform the Zumiez. In addition to that, VHAI is 4.27 times more volatile than Zumiez Inc. It trades about -0.17 of its total potential returns per unit of risk. Zumiez Inc is currently generating about 0.03 per unit of volatility. If you would invest  1,906  in Zumiez Inc on September 13, 2024 and sell it today you would earn a total of  271.00  from holding Zumiez Inc or generate 14.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	78.23%
Values	Daily Returns

VHAI  vs.  Zumiez Inc

VHAI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VHAI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, VHAI is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

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 latest inconsistent performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with VHAI and Zumiez

The main advantage of trading using opposite VHAI and Zumiez positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VHAI 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 VHAI 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.