Correlation Between Zumiez and Northann Corp

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

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

Diversification Opportunities for Zumiez and Northann Corp

-0.22

Correlation Coefficient

Zumiez  Northann Corp

Very good diversification

The 3 months correlation between Zumiez and Northann is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Zumiez Inc and Northann Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northann Corp 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 Northann Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northann Corp has no effect on the direction of Zumiez i.e., Zumiez and Northann Corp go up and down completely randomly.

Pair Corralation between Zumiez and Northann Corp

Given the investment horizon of 90 days Zumiez is expected to generate 1.28 times less return on investment than Northann Corp. But when comparing it to its historical volatility, Zumiez Inc is 2.62 times less risky than Northann Corp. It trades about 0.02 of its potential returns per unit of risk. Northann Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  43.00  in Northann Corp on October 9, 2024 and sell it today you would lose (13.00) from holding Northann Corp or give up 30.23% 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.  Northann Corp

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.

Northann Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Northann Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain fundamental indicators, Northann Corp disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zumiez and Northann Corp

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

The idea behind Zumiez Inc and Northann Corp 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.