Correlation Between Zalando SE and Brookdale Senior
Can any of the company-specific risk be diversified away by investing in both Zalando SE and Brookdale Senior 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 Brookdale Senior into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zalando SE and Brookdale Senior Living, you can compare the effects of market volatilities on Zalando SE and Brookdale Senior 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 Brookdale Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zalando SE and Brookdale Senior.
Diversification Opportunities for Zalando SE and Brookdale Senior
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Zalando and Brookdale is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Zalando SE and Brookdale Senior Living in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookdale Senior Living 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 Brookdale Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookdale Senior Living has no effect on the direction of Zalando SE i.e., Zalando SE and Brookdale Senior go up and down completely randomly.
Pair Corralation between Zalando SE and Brookdale Senior
Assuming the 90 days horizon Zalando SE is expected to generate 1.01 times more return on investment than Brookdale Senior. However, Zalando SE is 1.01 times more volatile than Brookdale Senior Living. It trades about 0.06 of its potential returns per unit of risk. Brookdale Senior Living is currently generating about 0.02 per unit of risk. If you would invest 2,184 in Zalando SE on August 26, 2024 and sell it today you would earn a total of 765.00 from holding Zalando SE or generate 35.03% 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. Brookdale Senior Living
Performance |
| Timeline |
| Zalando SE |
| Brookdale Senior Living |
Zalando SE and Brookdale Senior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zalando SE and Brookdale Senior
The main advantage of trading using opposite Zalando SE and Brookdale Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zalando SE position performs unexpectedly, Brookdale Senior 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 Brookdale Senior will offset losses from the drop in Brookdale Senior'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 |
| Brookdale Senior vs. Option Care Health | Brookdale Senior vs. HYGEIA HC HLDGS | Brookdale Senior vs. Superior Plus Corp | Brookdale Senior vs. Origin Agritech |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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