Correlation Between Amazon and Zalando SE
Can any of the company-specific risk be diversified away by investing in both Amazon and Zalando SE 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 Amazon and Zalando SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Zalando SE, you can compare the effects of market volatilities on Amazon and Zalando SE 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 Amazon with a short position of Zalando SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Zalando SE.
Diversification Opportunities for Amazon and Zalando SE
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Amazon and Zalando is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Zalando SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zalando SE and Amazon 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 Amazon Inc are associated (or correlated) with Zalando SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zalando SE has no effect on the direction of Amazon i.e., Amazon and Zalando SE go up and down completely randomly.
Pair Corralation between Amazon and Zalando SE
Assuming the 90 days horizon Amazon Inc is expected to generate 0.69 times more return on investment than Zalando SE. However, Amazon Inc is 1.46 times less risky than Zalando SE. It trades about 0.09 of its potential returns per unit of risk. Zalando SE is currently generating about 0.0 per unit of risk. If you would invest 8,729 in Amazon Inc on September 3, 2024 and sell it today you would earn a total of 10,953 from holding Amazon Inc or generate 125.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon Inc vs. Zalando SE
Performance |
| Timeline |
| Amazon Inc |
| Zalando SE |
Amazon and Zalando SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Zalando SE
The main advantage of trading using opposite Amazon and Zalando SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Zalando SE 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 Zalando SE will offset losses from the drop in Zalando SE's long position.| Amazon vs. Virtus Investment Partners | Amazon vs. Air Lease | Amazon vs. Chuangs China Investments | Amazon vs. ADRIATIC METALS LS 013355 |
| Zalando SE vs. Amazon Inc | Zalando SE vs. Alibaba Group Holdings | Zalando SE vs. JD Inc | Zalando SE vs. Superior Plus Corp |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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