Correlation Between Brilliant Earth and Zumiez
Can any of the company-specific risk be diversified away by investing in both Brilliant Earth and Zumiez 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 Brilliant Earth and Zumiez into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brilliant Earth Group and Zumiez Inc, you can compare the effects of market volatilities on Brilliant Earth and Zumiez 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 Brilliant Earth with a short position of Zumiez. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brilliant Earth and Zumiez.
Diversification Opportunities for Brilliant Earth and Zumiez
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Brilliant and Zumiez is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Brilliant Earth Group and Zumiez Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zumiez Inc and Brilliant Earth 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 Brilliant Earth Group are associated (or correlated) with Zumiez. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zumiez Inc has no effect on the direction of Brilliant Earth i.e., Brilliant Earth and Zumiez go up and down completely randomly.
Pair Corralation between Brilliant Earth and Zumiez
Given the investment horizon of 90 days Brilliant Earth Group is expected to generate 1.6 times more return on investment than Zumiez. However, Brilliant Earth is 1.6 times more volatile than Zumiez Inc. It trades about 0.15 of its potential returns per unit of risk. Zumiez Inc is currently generating about 0.12 per unit of risk. If you would invest 163.00 in Brilliant Earth Group on August 30, 2024 and sell it today you would earn a total of 23.00 from holding Brilliant Earth Group or generate 14.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brilliant Earth Group vs. Zumiez Inc
Performance |
| Timeline |
| Brilliant Earth Group |
| Zumiez Inc |
Brilliant Earth and Zumiez Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brilliant Earth and Zumiez
The main advantage of trading using opposite Brilliant Earth and Zumiez positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brilliant Earth position performs unexpectedly, Zumiez 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 Zumiez will offset losses from the drop in Zumiez's long position.| Brilliant Earth vs. Capri Holdings | Brilliant Earth vs. Movado Group | Brilliant Earth vs. Tapestry | Brilliant Earth vs. TheRealReal |
Check out your portfolio center.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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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