Correlation Between ZB and Maker
Can any of the company-specific risk be diversified away by investing in both ZB and Maker 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 ZB and Maker into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ZB and Maker, you can compare the effects of market volatilities on ZB and Maker 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 ZB with a short position of Maker. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZB and Maker.
Diversification Opportunities for ZB and Maker
Weak diversification
The 3 months correlation between ZB and Maker is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding ZB and Maker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maker and ZB 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 ZB are associated (or correlated) with Maker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maker has no effect on the direction of ZB i.e., ZB and Maker go up and down completely randomly.
Pair Corralation between ZB and Maker
If you would invest 142,633 in Maker on December 29, 2023 and sell it today you would earn a total of 190,608 from holding Maker or generate 133.64% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 0.79% |
Values | Daily Returns |
ZB vs. Maker
Performance |
Timeline |
ZB |
Risk-Adjusted Performance
0 of 100
Low | High |
Very Weak
Maker |
ZB and Maker Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ZB and Maker
The main advantage of trading using opposite ZB and Maker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZB position performs unexpectedly, Maker 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 Maker will offset losses from the drop in Maker's long position.The idea behind ZB and Maker 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.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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
Content Syndication Quickly integrate customizable finance content to your own investment portal | |
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
FinTech Suite Use AI to screen and filter profitable investment opportunities | |
Stocks Directory Find actively traded stocks across global markets |