Correlation Between Zalando SE and AIB Group
Can any of the company-specific risk be diversified away by investing in both Zalando SE and AIB Group 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 AIB Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zalando SE and AIB Group plc, you can compare the effects of market volatilities on Zalando SE and AIB Group 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 AIB Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zalando SE and AIB Group.
Diversification Opportunities for Zalando SE and AIB Group
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Zalando and AIB is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Zalando SE and AIB Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIB Group plc 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 AIB Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIB Group plc has no effect on the direction of Zalando SE i.e., Zalando SE and AIB Group go up and down completely randomly.
Pair Corralation between Zalando SE and AIB Group
Assuming the 90 days horizon Zalando SE is expected to generate 1.09 times more return on investment than AIB Group. However, Zalando SE is 1.09 times more volatile than AIB Group plc. It trades about 0.08 of its potential returns per unit of risk. AIB Group plc is currently generating about 0.03 per unit of risk. If you would invest 2,387 in Zalando SE on August 26, 2024 and sell it today you would earn a total of 562.00 from holding Zalando SE or generate 23.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zalando SE vs. AIB Group plc
Performance |
| Timeline |
| Zalando SE |
| AIB Group plc |
Zalando SE and AIB Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zalando SE and AIB Group
The main advantage of trading using opposite Zalando SE and AIB Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zalando SE position performs unexpectedly, AIB Group 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 AIB Group will offset losses from the drop in AIB Group's long position.| Zalando SE vs. Eastman Chemical | Zalando SE vs. Mitsui Chemicals | Zalando SE vs. Soken Chemical Engineering | Zalando SE vs. DEVRY EDUCATION GRP |
| AIB Group vs. Coeur Mining | AIB Group vs. CEOTRONICS | AIB Group vs. MINCO SILVER | AIB Group vs. GALENA MINING LTD |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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