Correlation Between Stitch Fix and Zumiez
Can any of the company-specific risk be diversified away by investing in both Stitch Fix 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 Stitch Fix and Zumiez into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stitch Fix and Zumiez Inc, you can compare the effects of market volatilities on Stitch Fix 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 Stitch Fix with a short position of Zumiez. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stitch Fix and Zumiez.
Diversification Opportunities for Stitch Fix and Zumiez
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Stitch and Zumiez is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Stitch Fix and Zumiez Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zumiez Inc and Stitch Fix 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 Stitch Fix 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 Stitch Fix i.e., Stitch Fix and Zumiez go up and down completely randomly.
Pair Corralation between Stitch Fix and Zumiez
Given the investment horizon of 90 days Stitch Fix is expected to generate 1.94 times more return on investment than Zumiez. However, Stitch Fix is 1.94 times more volatile than Zumiez Inc. It trades about -0.02 of its potential returns per unit of risk. Zumiez Inc is currently generating about -0.36 per unit of risk. If you would invest 487.00 in Stitch Fix on December 1, 2024 and sell it today you would lose (14.00) from holding Stitch Fix or give up 2.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stitch Fix vs. Zumiez Inc
Performance |
| Timeline |
| Stitch Fix |
| Zumiez Inc |
Stitch Fix and Zumiez Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stitch Fix and Zumiez
The main advantage of trading using opposite Stitch Fix and Zumiez positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stitch Fix 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.The idea behind Stitch Fix and Zumiez 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.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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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