Correlation Between Zebra Technologies and Nucor

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

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

Diversification Opportunities for Zebra Technologies and Nucor

-0.23

Correlation Coefficient

Zebra Technologies  Nucor

Very good diversification

The 3 months correlation between Zebra and Nucor is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Zebra Technologies and Nucor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nucor 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 Nucor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nucor has no effect on the direction of Zebra Technologies i.e., Zebra Technologies and Nucor go up and down completely randomly.

Pair Corralation between Zebra Technologies and Nucor

Assuming the 90 days trading horizon Zebra Technologies is expected to under-perform the Nucor. In addition to that, Zebra Technologies is 1.5 times more volatile than Nucor. It trades about -0.19 of its total potential returns per unit of risk. Nucor is currently generating about -0.03 per unit of volatility. If you would invest  6,080  in Nucor on December 24, 2024 and sell it today you would lose (283.00) from holding Nucor or give up 4.65% of portfolio value over 90 days.

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

Zebra Technologies  vs.  Nucor

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 weak 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.

Nucor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nucor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Nucor is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Zebra Technologies and Nucor

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

The idea behind Zebra Technologies and Nucor 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.