Correlation Between Zumiez and Compania Cervecerias

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

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

Diversification Opportunities for Zumiez and Compania Cervecerias

-0.35

Correlation Coefficient

Zumiez  Compania Cervecerias

Very good diversification

The 3 months correlation between Zumiez and Compania is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Zumiez Inc and Compania Cervecerias Unidas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania Cervecerias 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 Compania Cervecerias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania Cervecerias has no effect on the direction of Zumiez i.e., Zumiez and Compania Cervecerias go up and down completely randomly.

Pair Corralation between Zumiez and Compania Cervecerias

Given the investment horizon of 90 days Zumiez Inc is expected to under-perform the Compania Cervecerias. In addition to that, Zumiez is 2.6 times more volatile than Compania Cervecerias Unidas. It trades about -0.22 of its total potential returns per unit of risk. Compania Cervecerias Unidas is currently generating about -0.18 per unit of volatility. If you would invest  1,164  in Compania Cervecerias Unidas on October 8, 2024 and sell it today you would lose (42.00) from holding Compania Cervecerias Unidas or give up 3.61% of portfolio value over 90 days.

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

Zumiez Inc  vs.  Compania Cervecerias Unidas

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 latest inconsistent performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Compania Cervecerias

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Compania Cervecerias Unidas are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Compania Cervecerias is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Zumiez and Compania Cervecerias

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

The idea behind Zumiez Inc and Compania Cervecerias Unidas 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.