Correlation Between Zumiez and Genesco

Can any of the company-specific risk be diversified away by investing in both Zumiez and Genesco 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 Genesco into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Zumiez Inc and Genesco, you can compare the effects of market volatilities on Zumiez and Genesco 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 Genesco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zumiez and Genesco.

Diversification Opportunities for Zumiez and Genesco

0.7

Correlation Coefficient

Zumiez  Genesco

Poor diversification

The 3 months correlation between Zumiez and Genesco is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Zumiez Inc and Genesco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesco 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 Genesco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesco has no effect on the direction of Zumiez i.e., Zumiez and Genesco go up and down completely randomly.

Pair Corralation between Zumiez and Genesco

Given the investment horizon of 90 days Zumiez Inc is expected to generate 1.2 times more return on investment than Genesco. However, Zumiez is 1.2 times more volatile than Genesco. It trades about 0.29 of its potential returns per unit of risk. Genesco is currently generating about -0.14 per unit of risk. If you would invest  1,446  in Zumiez Inc on February 2, 2024 and sell it today you would earn a total of  266.00  from holding Zumiez Inc or generate 18.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Zumiez Inc  vs.  Genesco

Zumiez Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zumiez Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Zumiez is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Genesco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genesco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Zumiez and Genesco

The main advantage of trading using opposite Zumiez and Genesco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zumiez position performs unexpectedly, Genesco 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 Genesco will offset losses from the drop in Genesco's long position.

The idea behind Zumiez Inc and Genesco 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.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.