Correlation Between Zumiez and Macys

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

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

Diversification Opportunities for Zumiez and Macys

-0.02

Correlation Coefficient

Zumiez  Macys

Good diversification

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

Pair Corralation between Zumiez and Macys

Given the investment horizon of 90 days Zumiez Inc is expected to under-perform the Macys. In addition to that, Zumiez is 2.13 times more volatile than Macys Inc. It trades about -0.17 of its total potential returns per unit of risk. Macys Inc is currently generating about 0.03 per unit of volatility. If you would invest  1,613  in Macys Inc on September 23, 2024 and sell it today you would earn a total of  11.00  from holding Macys Inc or generate 0.68% return on investment over 90 days.

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

Zumiez Inc  vs.  Macys Inc

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 unfluctuating 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.

Macys Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Macys Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, Macys may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Zumiez and Macys

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

The idea behind Zumiez Inc and Macys 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.