Correlation Between Zumiez and Goldman Sachs

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

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

Diversification Opportunities for Zumiez and Goldman Sachs

-0.2

Correlation Coefficient

Zumiez  Goldman Sachs

Good diversification

The 3 months correlation between Zumiez and Goldman is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Zumiez Inc and Goldman Sachs Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Capital 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Capital has no effect on the direction of Zumiez i.e., Zumiez and Goldman Sachs go up and down completely randomly.

Pair Corralation between Zumiez and Goldman Sachs

Given the investment horizon of 90 days Zumiez Inc is expected to under-perform the Goldman Sachs. In addition to that, Zumiez is 3.53 times more volatile than Goldman Sachs Capital. It trades about -0.16 of its total potential returns per unit of risk. Goldman Sachs Capital is currently generating about -0.08 per unit of volatility. If you would invest  2,715  in Goldman Sachs Capital on October 5, 2024 and sell it today you would lose (57.00) from holding Goldman Sachs Capital or give up 2.1% 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.  Goldman Sachs Capital

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.

Goldman Sachs Capital

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Capital are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, Goldman Sachs is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Zumiez and Goldman Sachs

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

The idea behind Zumiez Inc and Goldman Sachs Capital 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.