Correlation Between Five Below and ZOOZ Power
Can any of the company-specific risk be diversified away by investing in both Five Below and ZOOZ Power 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 Five Below and ZOOZ Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Five Below and ZOOZ Power Ltd, you can compare the effects of market volatilities on Five Below and ZOOZ Power 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 Five Below with a short position of ZOOZ Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Five Below and ZOOZ Power.
Diversification Opportunities for Five Below and ZOOZ Power
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Five and ZOOZ is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Five Below and ZOOZ Power Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZOOZ Power and Five Below 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 Five Below are associated (or correlated) with ZOOZ Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZOOZ Power has no effect on the direction of Five Below i.e., Five Below and ZOOZ Power go up and down completely randomly.
Pair Corralation between Five Below and ZOOZ Power
Given the investment horizon of 90 days Five Below is expected to generate 1.24 times more return on investment than ZOOZ Power. However, Five Below is 1.24 times more volatile than ZOOZ Power Ltd. It trades about 0.38 of its potential returns per unit of risk. ZOOZ Power Ltd is currently generating about 0.13 per unit of risk. If you would invest 8,300 in Five Below on September 12, 2024 and sell it today you would earn a total of 2,642 from holding Five Below or generate 31.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Five Below vs. ZOOZ Power Ltd
Performance |
| Timeline |
| Five Below |
| ZOOZ Power |
Five Below and ZOOZ Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Five Below and ZOOZ Power
The main advantage of trading using opposite Five Below and ZOOZ Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Five Below position performs unexpectedly, ZOOZ Power 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 ZOOZ Power will offset losses from the drop in ZOOZ Power's long position.| Five Below vs. OReilly Automotive | Five Below vs. AutoZone | Five Below vs. Genuine Parts Co | Five Below vs. Williams Sonoma |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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