Correlation Between Zebra Technologies and Hess

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

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

Diversification Opportunities for Zebra Technologies and Hess

0.07

Correlation Coefficient

Zebra Technologies  Hess

Significant diversification

The 3 months correlation between Zebra and Hess is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Zebra Technologies and Hess Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hess 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 Hess. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hess has no effect on the direction of Zebra Technologies i.e., Zebra Technologies and Hess go up and down completely randomly.

Pair Corralation between Zebra Technologies and Hess

Assuming the 90 days trading horizon Zebra Technologies is expected to under-perform the Hess. In addition to that, Zebra Technologies is 19.57 times more volatile than Hess Corporation. It trades about -0.22 of its total potential returns per unit of risk. Hess Corporation is currently generating about 0.24 per unit of volatility. If you would invest  37,818  in Hess Corporation on October 5, 2024 and sell it today you would earn a total of  106.00  from holding Hess Corporation or generate 0.28% return on investment over 90 days.

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

Zebra Technologies  vs.  Hess Corp.

Zebra Technologies

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zebra Technologies are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Zebra Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Hess

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hess Corporation are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Hess is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Zebra Technologies and Hess

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

The idea behind Zebra Technologies and Hess Corporation 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.