Correlation Between Zumiez and Amazon

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

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

Diversification Opportunities for Zumiez and Amazon

0.51

Correlation Coefficient

Zumiez  Amazon

Very weak diversification

The 3 months correlation between Zumiez and Amazon is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Zumiez Inc and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and Zumiez 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 Zumiez Inc are associated (or correlated) with Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of Zumiez i.e., Zumiez and Amazon go up and down completely randomly.

Pair Corralation between Zumiez and Amazon

Given the investment horizon of 90 days Zumiez Inc is expected to under-perform the Amazon. In addition to that, Zumiez is 1.78 times more volatile than Amazon Inc. It trades about -0.09 of its total potential returns per unit of risk. Amazon Inc is currently generating about -0.12 per unit of volatility. If you would invest  22,130  in Amazon Inc on December 29, 2024 and sell it today you would lose (2,858) from holding Amazon Inc or give up 12.91% of portfolio value over 90 days.

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

Zumiez Inc  vs.  Amazon Inc

Zumiez Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zumiez Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain fairly 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.

Amazon Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amazon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Zumiez and Amazon

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

The idea behind Zumiez Inc and Amazon 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.