Correlation Between Zenvia and DOLLAR

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

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

Diversification Opportunities for Zenvia and DOLLAR

-0.39

Correlation Coefficient

Zenvia  DOLLAR

Very good diversification

The 3 months correlation between Zenvia and DOLLAR is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Zenvia Inc and DOLLAR TREE INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DOLLAR TREE INC and Zenvia 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 Zenvia Inc are associated (or correlated) with DOLLAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOLLAR TREE INC has no effect on the direction of Zenvia i.e., Zenvia and DOLLAR go up and down completely randomly.

Pair Corralation between Zenvia and DOLLAR

Given the investment horizon of 90 days Zenvia Inc is expected to generate 18.1 times more return on investment than DOLLAR. However, Zenvia is 18.1 times more volatile than DOLLAR TREE INC. It trades about 0.07 of its potential returns per unit of risk. DOLLAR TREE INC is currently generating about -0.03 per unit of risk. If you would invest  115.00  in Zenvia Inc on October 2, 2024 and sell it today you would earn a total of  120.00  from holding Zenvia Inc or generate 104.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.56%
Values	Daily Returns

Zenvia Inc  vs.  DOLLAR TREE INC

Zenvia Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zenvia Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Zenvia showed solid returns over the last few months and may actually be approaching a breakup point.

DOLLAR TREE INC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Zenvia and DOLLAR

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

The idea behind Zenvia Inc and DOLLAR TREE 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.