Correlation Between T.J. Maxx and Zumiez
Can any of the company-specific risk be diversified away by investing in both T.J. Maxx 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 T.J. Maxx and Zumiez into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The TJX Companies and Zumiez Inc, you can compare the effects of market volatilities on T.J. Maxx 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 T.J. Maxx with a short position of Zumiez. Check out your portfolio center. Please also check ongoing floating volatility patterns of T.J. Maxx and Zumiez.
Diversification Opportunities for T.J. Maxx and Zumiez
Very weak diversification
The 3 months correlation between T.J. and Zumiez is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding The TJX Companies and Zumiez Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zumiez Inc and T.J. Maxx 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 The TJX 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 T.J. Maxx i.e., T.J. Maxx and Zumiez go up and down completely randomly.
Pair Corralation between T.J. Maxx and Zumiez
Considering the 90-day investment horizon The TJX Companies is expected to generate 0.35 times more return on investment than Zumiez. However, The TJX Companies is 2.9 times less risky than Zumiez. It trades about 0.09 of its potential returns per unit of risk. Zumiez Inc is currently generating about 0.02 per unit of risk. If you would invest 7,707 in The TJX Companies on August 27, 2024 and sell it today you would earn a total of 4,440 from holding The TJX Companies or generate 57.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The TJX Companies vs. Zumiez Inc
Performance |
| Timeline |
| TJX Companies |
| Zumiez Inc |
T.J. Maxx and Zumiez Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T.J. Maxx and Zumiez
The main advantage of trading using opposite T.J. Maxx and Zumiez positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T.J. Maxx 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.| T.J. Maxx vs. Burlington Stores | T.J. Maxx vs. Guess Inc | T.J. Maxx vs. Urban Outfitters | T.J. Maxx vs. Childrens Place |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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