Correlation Between Zumiez and Thor Industries

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

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

Diversification Opportunities for Zumiez and Thor Industries

0.72

Correlation Coefficient

Zumiez  Thor Industries

Poor diversification

The 3 months correlation between Zumiez and Thor is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Zumiez Inc and Thor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Industries 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 Thor Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thor Industries has no effect on the direction of Zumiez i.e., Zumiez and Thor Industries go up and down completely randomly.

Pair Corralation between Zumiez and Thor Industries

Given the investment horizon of 90 days Zumiez Inc is expected to under-perform the Thor Industries. In addition to that, Zumiez is 2.12 times more volatile than Thor Industries. It trades about -0.2 of its total potential returns per unit of risk. Thor Industries is currently generating about 0.21 per unit of volatility. If you would invest  9,534  in Thor Industries on October 25, 2024 and sell it today you would earn a total of  677.00  from holding Thor Industries or generate 7.1% return on investment over 90 days.

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

Zumiez Inc  vs.  Thor Industries

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 inconsistent performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Thor Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thor Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Thor Industries is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Zumiez and Thor Industries

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

The idea behind Zumiez Inc and Thor Industries 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.