Correlation Between Qurate Retail and Zalando SE

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Can any of the company-specific risk be diversified away by investing in both Qurate Retail 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 Qurate Retail and Zalando SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Qurate Retail Series and Zalando SE, you can compare the effects of market volatilities on Qurate Retail 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 Qurate Retail with a short position of Zalando SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qurate Retail and Zalando SE.

Diversification Opportunities for Qurate Retail and Zalando SE

0.28
  Correlation Coefficient

Modest diversification

The 3 months correlation between Qurate and Zalando is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Qurate Retail Series and Zalando SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zalando SE and Qurate Retail 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 Qurate Retail Series 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 Qurate Retail i.e., Qurate Retail and Zalando SE go up and down completely randomly.

Pair Corralation between Qurate Retail and Zalando SE

Assuming the 90 days trading horizon Qurate Retail Series is expected to generate 2.04 times more return on investment than Zalando SE. However, Qurate Retail is 2.04 times more volatile than Zalando SE. It trades about -0.01 of its potential returns per unit of risk. Zalando SE is currently generating about -0.02 per unit of risk. If you would invest  419.00  in Qurate Retail Series on December 29, 2023 and sell it today you would lose (317.00) from holding Qurate Retail Series or give up 75.66% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Qurate Retail Series  vs.  Zalando SE

 Performance 
       Timeline  
Qurate Retail Series 

Risk-Adjusted Performance

8 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Qurate Retail Series are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Qurate Retail reported solid returns over the last few months and may actually be approaching a breakup point.
Zalando SE 

Risk-Adjusted Performance

8 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Zalando SE are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Zalando SE reported solid returns over the last few months and may actually be approaching a breakup point.

Qurate Retail and Zalando SE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Qurate Retail and Zalando SE

The main advantage of trading using opposite Qurate Retail and Zalando SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qurate Retail 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.
The idea behind Qurate Retail Series and Zalando SE 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.
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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