Correlation Between Zalando SE and Rai Way
Can any of the company-specific risk be diversified away by investing in both Zalando SE and Rai Way 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 Zalando SE and Rai Way into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zalando SE and Rai Way SpA, you can compare the effects of market volatilities on Zalando SE and Rai Way 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 Zalando SE with a short position of Rai Way. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zalando SE and Rai Way.
Diversification Opportunities for Zalando SE and Rai Way
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Zalando and Rai is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Zalando SE and Rai Way SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rai Way SpA and Zalando SE 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 Zalando SE are associated (or correlated) with Rai Way. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rai Way SpA has no effect on the direction of Zalando SE i.e., Zalando SE and Rai Way go up and down completely randomly.
Pair Corralation between Zalando SE and Rai Way
Assuming the 90 days horizon Zalando SE is expected to generate 1.7 times more return on investment than Rai Way. However, Zalando SE is 1.7 times more volatile than Rai Way SpA. It trades about 0.02 of its potential returns per unit of risk. Rai Way SpA is currently generating about -0.1 per unit of risk. If you would invest 2,871 in Zalando SE on August 31, 2024 and sell it today you would earn a total of 19.00 from holding Zalando SE or generate 0.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Zalando SE vs. Rai Way SpA
Performance |
| Timeline |
| Zalando SE |
| Rai Way SpA |
Zalando SE and Rai Way Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zalando SE and Rai Way
The main advantage of trading using opposite Zalando SE and Rai Way positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zalando SE position performs unexpectedly, Rai Way 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 Rai Way will offset losses from the drop in Rai Way's long position.| Zalando SE vs. Playtech plc | Zalando SE vs. PKSHA TECHNOLOGY INC | Zalando SE vs. NetSol Technologies | Zalando SE vs. SOFI TECHNOLOGIES |
| Rai Way vs. JJ SNACK FOODS | Rai Way vs. THAI BEVERAGE | Rai Way vs. Tyson Foods | Rai Way vs. Suntory Beverage Food |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |