Correlation Between Zumiez and Vince Holding

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

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

Diversification Opportunities for Zumiez and Vince Holding

0.22

Correlation Coefficient

Zumiez  Vince Holding

Modest diversification

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

Pair Corralation between Zumiez and Vince Holding

Given the investment horizon of 90 days Zumiez Inc is expected to generate 0.49 times more return on investment than Vince Holding. However, Zumiez Inc is 2.03 times less risky than Vince Holding. It trades about 0.01 of its potential returns per unit of risk. Vince Holding Corp is currently generating about -0.01 per unit of risk. If you would invest  2,184  in Zumiez Inc on September 19, 2024 and sell it today you would lose (142.00) from holding Zumiez Inc or give up 6.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Zumiez Inc  vs.  Vince Holding 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.

Vince Holding Corp

Risk-Adjusted Performance

4 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vince Holding Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent fundamental indicators, Vince Holding exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zumiez and Vince Holding

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

The idea behind Zumiez Inc and Vince Holding 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.