Correlation Between Zebra Technologies and Dell Technologies

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

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

Diversification Opportunities for Zebra Technologies and Dell Technologies

0.65

Correlation Coefficient

Zebra Technologies  Dell Technologies

Poor diversification

The 3 months correlation between Zebra and Dell is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Zebra Technologies and Dell Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dell Technologies and Zebra Technologies 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 Zebra Technologies are associated (or correlated) with Dell Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dell Technologies has no effect on the direction of Zebra Technologies i.e., Zebra Technologies and Dell Technologies go up and down completely randomly.

Pair Corralation between Zebra Technologies and Dell Technologies

Assuming the 90 days trading horizon Zebra Technologies is expected to under-perform the Dell Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Zebra Technologies is 1.14 times less risky than Dell Technologies. The stock trades about -0.19 of its potential returns per unit of risk. The Dell Technologies is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  73,198  in Dell Technologies on December 22, 2024 and sell it today you would lose (17,943) from holding Dell Technologies or give up 24.51% of portfolio value over 90 days.

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

Zebra Technologies  vs.  Dell Technologies

Zebra Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zebra Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental drivers 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.

Dell Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dell Technologies 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 technical and fundamental 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 Zebra Technologies and Dell Technologies

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

The idea behind Zebra Technologies and Dell Technologies 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.