Correlation Between Zumiez and Kirklands
Can any of the company-specific risk be diversified away by investing in both Zumiez and Kirklands 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 Zumiez and Kirklands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zumiez Inc and Kirklands, you can compare the effects of market volatilities on Zumiez and Kirklands 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 Zumiez with a short position of Kirklands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zumiez and Kirklands.
Diversification Opportunities for Zumiez and Kirklands
Excellent diversification
The 3 months correlation between Zumiez and Kirklands is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Zumiez Inc and Kirklands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kirklands and Zumiez 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 Zumiez Inc are associated (or correlated) with Kirklands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kirklands has no effect on the direction of Zumiez i.e., Zumiez and Kirklands go up and down completely randomly.
Pair Corralation between Zumiez and Kirklands
Given the investment horizon of 90 days Zumiez Inc is expected to under-perform the Kirklands. But the stock apears to be less risky and, when comparing its historical volatility, Zumiez Inc is 1.35 times less risky than Kirklands. The stock trades about -0.12 of its potential returns per unit of risk. The Kirklands is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 157.00 in Kirklands on August 23, 2024 and sell it today you would earn a total of 2.00 from holding Kirklands or generate 1.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zumiez Inc vs. Kirklands
Performance |
| Timeline |
| Zumiez Inc |
| Kirklands |
Zumiez and Kirklands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zumiez and Kirklands
The main advantage of trading using opposite Zumiez and Kirklands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zumiez position performs unexpectedly, Kirklands 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 Kirklands will offset losses from the drop in Kirklands' long position.The idea behind Zumiez Inc and Kirklands 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.| Kirklands vs. Small Cap Core | Kirklands vs. Freedom Holding Corp | Kirklands vs. Gfl Environmental Holdings | Kirklands vs. Growth Fund Of |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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