Correlation Between Zebra Technologies and Lowes Companies

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

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

Diversification Opportunities for Zebra Technologies and Lowes Companies

0.55

Correlation Coefficient

Zebra Technologies  Lowes Companies

Very weak diversification

The 3 months correlation between Zebra and Lowes is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Zebra Technologies and Lowes Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowes Companies 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 Lowes Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lowes Companies has no effect on the direction of Zebra Technologies i.e., Zebra Technologies and Lowes Companies go up and down completely randomly.

Pair Corralation between Zebra Technologies and Lowes Companies

Assuming the 90 days trading horizon Zebra Technologies is expected to generate 0.49 times more return on investment than Lowes Companies. However, Zebra Technologies is 2.03 times less risky than Lowes Companies. It trades about -0.23 of its potential returns per unit of risk. Lowes Companies is currently generating about -0.22 per unit of risk. If you would invest  8,232  in Zebra Technologies on October 10, 2024 and sell it today you would lose (304.00) from holding Zebra Technologies or give up 3.69% of portfolio value over 90 days.

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

Zebra Technologies  vs.  Lowes Companies

Zebra Technologies

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zebra Technologies are ranked lower than 12 (%) 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.

Lowes Companies

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lowes Companies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Lowes Companies 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 Lowes Companies

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

The idea behind Zebra Technologies and Lowes Companies 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..