Correlation Between Zoom Video and Bath Body
Can any of the company-specific risk be diversified away by investing in both Zoom Video and Bath Body 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 Zoom Video and Bath Body into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zoom Video Communications and Bath Body Works, you can compare the effects of market volatilities on Zoom Video and Bath Body 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 Zoom Video with a short position of Bath Body. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoom Video and Bath Body.
Diversification Opportunities for Zoom Video and Bath Body
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Zoom and Bath is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and Bath Body Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bath Body Works and Zoom Video 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 Zoom Video Communications are associated (or correlated) with Bath Body. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bath Body Works has no effect on the direction of Zoom Video i.e., Zoom Video and Bath Body go up and down completely randomly.
Pair Corralation between Zoom Video and Bath Body
Assuming the 90 days trading horizon Zoom Video Communications is expected to generate 0.65 times more return on investment than Bath Body. However, Zoom Video Communications is 1.55 times less risky than Bath Body. It trades about 0.04 of its potential returns per unit of risk. Bath Body Works is currently generating about 0.02 per unit of risk. If you would invest 1,474 in Zoom Video Communications on September 25, 2024 and sell it today you would earn a total of 639.00 from holding Zoom Video Communications or generate 43.35% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 55.6% |
Values | Daily Returns |
Zoom Video Communications vs. Bath Body Works
Performance |
Timeline |
Zoom Video Communications |
Bath Body Works |
Zoom Video and Bath Body Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Zoom Video and Bath Body
The main advantage of trading using opposite Zoom Video and Bath Body positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zoom Video position performs unexpectedly, Bath Body 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 Bath Body will offset losses from the drop in Bath Body's long position.Zoom Video vs. New Oriental Education | Zoom Video vs. CM Hospitalar SA | Zoom Video vs. Fidelity National Information | Zoom Video vs. Metalurgica Gerdau SA |
Bath Body vs. Tyson Foods | Bath Body vs. The Home Depot | Bath Body vs. British American Tobacco | Bath Body vs. Extra Space Storage |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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