Correlation Between Zumiez and Alumina

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

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

Diversification Opportunities for Zumiez and Alumina

-0.02

Correlation Coefficient

Zumiez  Alumina

Good diversification

The 3 months correlation between Zumiez and Alumina is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Zumiez Inc and Alumina Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alumina Limited 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 Alumina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alumina Limited has no effect on the direction of Zumiez i.e., Zumiez and Alumina go up and down completely randomly.

Pair Corralation between Zumiez and Alumina

Given the investment horizon of 90 days Zumiez Inc is expected to under-perform the Alumina. In addition to that, Zumiez is 1.02 times more volatile than Alumina Limited. It trades about 0.0 of its total potential returns per unit of risk. Alumina Limited is currently generating about 0.01 per unit of volatility. If you would invest  113.00  in Alumina Limited on October 12, 2024 and sell it today you would lose (2.00) from holding Alumina Limited or give up 1.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	78.38%
Values	Daily Returns

Zumiez Inc  vs.  Alumina Limited

Zumiez Inc

Risk-Adjusted Performance

0 of 100

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 inconsistent performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Alumina Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alumina Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Alumina is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Zumiez and Alumina

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

The idea behind Zumiez Inc and Alumina Limited 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.