Correlation Between Tile Shop and Zumiez
Can any of the company-specific risk be diversified away by investing in both Tile Shop 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 Tile Shop and Zumiez into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tile Shop Holdings and Zumiez Inc, you can compare the effects of market volatilities on Tile Shop 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 Tile Shop with a short position of Zumiez. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tile Shop and Zumiez.
Diversification Opportunities for Tile Shop and Zumiez
Excellent diversification
The 3 months correlation between Tile and Zumiez is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Tile Shop Holdings and Zumiez Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zumiez Inc and Tile Shop 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 Tile Shop Holdings 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 Tile Shop i.e., Tile Shop and Zumiez go up and down completely randomly.
Pair Corralation between Tile Shop and Zumiez
Given the investment horizon of 90 days Tile Shop is expected to generate 17.63 times less return on investment than Zumiez. But when comparing it to its historical volatility, Tile Shop Holdings is 1.42 times less risky than Zumiez. It trades about 0.01 of its potential returns per unit of risk. Zumiez Inc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,144 in Zumiez Inc on August 30, 2024 and sell it today you would earn a total of 150.00 from holding Zumiez Inc or generate 7.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tile Shop Holdings vs. Zumiez Inc
Performance |
| Timeline |
| Tile Shop Holdings |
| Zumiez Inc |
Tile Shop and Zumiez Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tile Shop and Zumiez
The main advantage of trading using opposite Tile Shop and Zumiez positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tile Shop 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.| Tile Shop vs. Kingfisher PLC ADR | Tile Shop vs. Haverty Furniture Companies | Tile Shop vs. Arhaus Inc | Tile Shop vs. Kirklands |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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