Correlation Between ZALANDO SE and Cbd Of

Can any of the company-specific risk be diversified away by investing in both ZALANDO SE and Cbd Of 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 Cbd Of into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ZALANDO SE ADR and Cbd of Denver, you can compare the effects of market volatilities on ZALANDO SE and Cbd Of 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 Cbd Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZALANDO SE and Cbd Of.

Diversification Opportunities for ZALANDO SE and Cbd Of

0.63

Correlation Coefficient

ZALANDO SE  Cbd Of

Poor diversification

The 3 months correlation between ZALANDO and Cbd is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding ZALANDO SE ADR and Cbd of Denver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cbd of Denver 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 ADR are associated (or correlated) with Cbd Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cbd of Denver has no effect on the direction of ZALANDO SE i.e., ZALANDO SE and Cbd Of go up and down completely randomly.

Pair Corralation between ZALANDO SE and Cbd Of

Assuming the 90 days horizon ZALANDO SE ADR is expected to generate 0.29 times more return on investment than Cbd Of. However, ZALANDO SE ADR is 3.44 times less risky than Cbd Of. It trades about -0.15 of its potential returns per unit of risk. Cbd of Denver is currently generating about -0.15 per unit of risk. If you would invest  1,416  in ZALANDO SE ADR on February 23, 2024 and sell it today you would lose (144.00) from holding ZALANDO SE ADR or give up 10.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

ZALANDO SE ADR  vs.  Cbd of Denver

ZALANDO SE ADR

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ZALANDO SE ADR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, ZALANDO SE showed solid returns over the last few months and may actually be approaching a breakup point.

Cbd of Denver

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cbd of Denver are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Cbd Of exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ZALANDO SE and Cbd Of

The main advantage of trading using opposite ZALANDO SE and Cbd Of positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZALANDO SE position performs unexpectedly, Cbd Of 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 Cbd Of will offset losses from the drop in Cbd Of's long position.

The idea behind ZALANDO SE ADR and Cbd of Denver pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.