Correlation Between Zumiez and REYNOLDS

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

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

Diversification Opportunities for Zumiez and REYNOLDS

-0.17

Correlation Coefficient

Zumiez  REYNOLDS

Good diversification

The 3 months correlation between Zumiez and REYNOLDS is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Zumiez Inc and REYNOLDS AMERN INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REYNOLDS AMERN 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 REYNOLDS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REYNOLDS AMERN INC has no effect on the direction of Zumiez i.e., Zumiez and REYNOLDS go up and down completely randomly.

Pair Corralation between Zumiez and REYNOLDS

Given the investment horizon of 90 days Zumiez Inc is expected to under-perform the REYNOLDS. In addition to that, Zumiez is 12.74 times more volatile than REYNOLDS AMERN INC. It trades about -0.01 of its total potential returns per unit of risk. REYNOLDS AMERN INC is currently generating about 0.0 per unit of volatility. If you would invest  9,844  in REYNOLDS AMERN INC on December 3, 2024 and sell it today you would earn a total of  41.00  from holding REYNOLDS AMERN INC or generate 0.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Zumiez Inc  vs.  REYNOLDS AMERN INC

Zumiez Inc

Risk-Adjusted Performance

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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

REYNOLDS AMERN INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days REYNOLDS AMERN INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, REYNOLDS is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Zumiez and REYNOLDS

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

The idea behind Zumiez Inc and REYNOLDS AMERN 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.