Correlation Between International Business and ZALANDO SE
Can any of the company-specific risk be diversified away by investing in both International Business 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 International Business and ZALANDO SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Business Machines and ZALANDO SE ADR, you can compare the effects of market volatilities on International Business 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 International Business with a short position of ZALANDO SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and ZALANDO SE.
Diversification Opportunities for International Business and ZALANDO SE
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between International and ZALANDO is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and ZALANDO SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZALANDO SE ADR and International Business 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 International Business Machines 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 ADR has no effect on the direction of International Business i.e., International Business and ZALANDO SE go up and down completely randomly.
Pair Corralation between International Business and ZALANDO SE
Considering the 90-day investment horizon International Business Machines is expected to generate 0.43 times more return on investment than ZALANDO SE. However, International Business Machines is 2.3 times less risky than ZALANDO SE. It trades about 0.14 of its potential returns per unit of risk. ZALANDO SE ADR is currently generating about 0.01 per unit of risk. If you would invest 11,638 in International Business Machines on September 6, 2024 and sell it today you would earn a total of 11,711 from holding International Business Machines or generate 100.63% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
International Business Machine vs. ZALANDO SE ADR
Performance |
Timeline |
International Business |
ZALANDO SE ADR |
International Business and ZALANDO SE Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with International Business and ZALANDO SE
The main advantage of trading using opposite International Business and ZALANDO SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business 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.International Business vs. Infosys Ltd ADR | International Business vs. FiscalNote Holdings | International Business vs. Innodata | International Business vs. Aurora Innovation |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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