Correlation Between Zumiez and Freeport

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

By analyzing existing cross correlation between Zumiez Inc and Freeport McMoRan 545 percent, you can compare the effects of market volatilities on Zumiez and Freeport 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 Freeport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zumiez and Freeport.

Diversification Opportunities for Zumiez and Freeport

0.37

Correlation Coefficient

Zumiez  Freeport

Weak diversification

The 3 months correlation between Zumiez and Freeport is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Zumiez Inc and Freeport McMoRan 545 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freeport McMoRan 545 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 Freeport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freeport McMoRan 545 has no effect on the direction of Zumiez i.e., Zumiez and Freeport go up and down completely randomly.

Pair Corralation between Zumiez and Freeport

Given the investment horizon of 90 days Zumiez Inc is expected to generate 2.34 times more return on investment than Freeport. However, Zumiez is 2.34 times more volatile than Freeport McMoRan 545 percent. It trades about 0.01 of its potential returns per unit of risk. Freeport McMoRan 545 percent is currently generating about 0.01 per unit of risk. If you would invest  2,174  in Zumiez Inc on September 20, 2024 and sell it today you would lose (274.00) from holding Zumiez Inc or give up 12.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Zumiez Inc  vs.  Freeport McMoRan 545 percent

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.

Freeport McMoRan 545

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freeport McMoRan 545 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for Freeport McMoRan 545 percent investors.

Pair Trading with Zumiez and Freeport

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

The idea behind Zumiez Inc and Freeport McMoRan 545 percent 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.