Correlation Between Spire Global and Zalando SE

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

By analyzing existing cross correlation between Spire Global and Zalando SE, you can compare the effects of market volatilities on Spire Global 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 Spire Global with a short position of Zalando SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spire Global and Zalando SE.

Diversification Opportunities for Spire Global and Zalando SE

-0.01

Correlation Coefficient

Spire Global  Zalando SE

Good diversification

The 3 months correlation between Spire and Zalando is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Spire Global and Zalando SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zalando SE and Spire Global 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 Spire Global 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 Spire Global i.e., Spire Global and Zalando SE go up and down completely randomly.

Pair Corralation between Spire Global and Zalando SE

Given the investment horizon of 90 days Spire Global is expected to generate 1.35 times less return on investment than Zalando SE. In addition to that, Spire Global is 1.27 times more volatile than Zalando SE. It trades about 0.21 of its total potential returns per unit of risk. Zalando SE is currently generating about 0.35 per unit of volatility. If you would invest  2,818  in Zalando SE on September 12, 2024 and sell it today you would earn a total of  850.00  from holding Zalando SE or generate 30.16% return on investment over 90 days.

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

Spire Global  vs.  Zalando SE

Spire Global

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Spire Global are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating forward indicators, Spire Global reported solid returns over the last few months and may actually be approaching a breakup point.

Zalando SE

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zalando SE are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Zalando SE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Spire Global and Zalando SE

The main advantage of trading using opposite Spire Global and Zalando SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spire Global 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 Spire Global 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.

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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.