Correlation Between Lowes Companies and Zumiez
Can any of the company-specific risk be diversified away by investing in both Lowes Companies 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 Lowes Companies and Zumiez into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lowes Companies and Zumiez Inc, you can compare the effects of market volatilities on Lowes Companies 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 Lowes Companies with a short position of Zumiez. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lowes Companies and Zumiez.
Diversification Opportunities for Lowes Companies and Zumiez
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lowes and Zumiez is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Lowes Companies and Zumiez Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zumiez Inc and Lowes Companies 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 Lowes Companies 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 Lowes Companies i.e., Lowes Companies and Zumiez go up and down completely randomly.
Pair Corralation between Lowes Companies and Zumiez
Considering the 90-day investment horizon Lowes Companies is expected to generate 0.49 times more return on investment than Zumiez. However, Lowes Companies is 2.05 times less risky than Zumiez. It trades about 0.04 of its potential returns per unit of risk. Zumiez Inc is currently generating about 0.01 per unit of risk. If you would invest 20,651 in Lowes Companies on August 23, 2024 and sell it today you would earn a total of 5,871 from holding Lowes Companies or generate 28.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lowes Companies vs. Zumiez Inc
Performance |
| Timeline |
| Lowes Companies |
| Zumiez Inc |
Lowes Companies and Zumiez Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lowes Companies and Zumiez
The main advantage of trading using opposite Lowes Companies and Zumiez positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lowes Companies 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.| Lowes Companies vs. Floor Decor Holdings | Lowes Companies vs. Arhaus Inc | Lowes Companies vs. Haverty Furniture Companies | Lowes Companies vs. Home Depot |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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