Correlation Between NYSE Composite and Zalando SE
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Zalando SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Zalando SE, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Zalando SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Zalando SE.
Diversification Opportunities for NYSE Composite and Zalando SE
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NYSE and Zalando is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Zalando SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zalando SE and NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Zalando SE go up and down completely randomly.
Pair Corralation between NYSE Composite and Zalando SE
Assuming the 90 days trading horizon NYSE Composite is expected to generate 127.43 times less return on investment than Zalando SE. But when comparing it to its historical volatility, NYSE Composite is 8.29 times less risky than Zalando SE. It trades about 0.02 of its potential returns per unit of risk. Zalando SE is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 2,818 in Zalando SE on September 13, 2024 and sell it today you would earn a total of 850.00 from holding Zalando SE or generate 30.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
NYSE Composite vs. Zalando SE
Performance |
| Timeline |
NYSE Composite and Zalando SE Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Zalando SE
Pair trading matchups for Zalando SE
Pair Trading with NYSE Composite and Zalando SE
The main advantage of trading using opposite NYSE Composite and Zalando SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Boston Beer | NYSE Composite vs. Freedom Bank of | NYSE Composite vs. KeyCorp | NYSE Composite vs. LithiumBank Resources 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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