Correlation Between Tapestry and Zumiez
Can any of the company-specific risk be diversified away by investing in both Tapestry 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 Tapestry and Zumiez into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tapestry and Zumiez Inc, you can compare the effects of market volatilities on Tapestry 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 Tapestry with a short position of Zumiez. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tapestry and Zumiez.
Diversification Opportunities for Tapestry and Zumiez
Significant diversification
The 3 months correlation between Tapestry and Zumiez is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Tapestry and Zumiez Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zumiez Inc and Tapestry 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 Tapestry 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 Tapestry i.e., Tapestry and Zumiez go up and down completely randomly.
Pair Corralation between Tapestry and Zumiez
Considering the 90-day investment horizon Tapestry is expected to under-perform the Zumiez. But the stock apears to be less risky and, when comparing its historical volatility, Tapestry is 1.29 times less risky than Zumiez. The stock trades about -0.08 of its potential returns per unit of risk. The Zumiez Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,278 in Zumiez Inc on January 12, 2025 and sell it today you would earn a total of 60.00 from holding Zumiez Inc or generate 4.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tapestry vs. Zumiez Inc
Performance |
| Timeline |
| Tapestry |
| Zumiez Inc |
Tapestry and Zumiez Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tapestry and Zumiez
The main advantage of trading using opposite Tapestry and Zumiez positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tapestry 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.| Tapestry vs. Signet Jewelers | Tapestry vs. Movado Group | Tapestry vs. Lanvin Group Holdings | Tapestry 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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