Correlation Between Zumiez and SBM Offshore

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

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

Diversification Opportunities for Zumiez and SBM Offshore

0.19

Correlation Coefficient

Zumiez  SBM Offshore

Average diversification

The 3 months correlation between Zumiez and SBM is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Zumiez Inc and SBM Offshore NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM Offshore NV 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 SBM Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBM Offshore NV has no effect on the direction of Zumiez i.e., Zumiez and SBM Offshore go up and down completely randomly.

Pair Corralation between Zumiez and SBM Offshore

Given the investment horizon of 90 days Zumiez is expected to generate 6.36 times less return on investment than SBM Offshore. But when comparing it to its historical volatility, Zumiez Inc is 1.62 times less risky than SBM Offshore. It trades about 0.01 of its potential returns per unit of risk. SBM Offshore NV is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,577  in SBM Offshore NV on September 20, 2024 and sell it today you would earn a total of  123.00  from holding SBM Offshore NV or generate 7.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	72.18%
Values	Daily Returns

Zumiez Inc  vs.  SBM Offshore NV

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.

SBM Offshore NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SBM Offshore NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, SBM Offshore is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Zumiez and SBM Offshore

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

The idea behind Zumiez Inc and SBM Offshore NV 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.