Correlation Between Zoom Video and FuelCell Energy
Can any of the company-specific risk be diversified away by investing in both Zoom Video and FuelCell Energy 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 FuelCell Energy 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 FuelCell Energy, you can compare the effects of market volatilities on Zoom Video and FuelCell Energy 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 FuelCell Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoom Video and FuelCell Energy.
Diversification Opportunities for Zoom Video and FuelCell Energy
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Zoom and FuelCell is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and FuelCell Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FuelCell Energy 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 FuelCell Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FuelCell Energy has no effect on the direction of Zoom Video i.e., Zoom Video and FuelCell Energy go up and down completely randomly.
Pair Corralation between Zoom Video and FuelCell Energy
Assuming the 90 days trading horizon Zoom Video is expected to generate 169.08 times less return on investment than FuelCell Energy. But when comparing it to its historical volatility, Zoom Video Communications is 58.14 times less risky than FuelCell Energy. It trades about 0.04 of its potential returns per unit of risk. FuelCell Energy is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 7,780 in FuelCell Energy on September 2, 2024 and sell it today you would lose (6,591) from holding FuelCell Energy or give up 84.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.68% |
| Values | Daily Returns |
Zoom Video Communications vs. FuelCell Energy
Performance |
| Timeline |
| Zoom Video Communications |
| FuelCell Energy |
Zoom Video and FuelCell Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zoom Video and FuelCell Energy
The main advantage of trading using opposite Zoom Video and FuelCell Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zoom Video position performs unexpectedly, FuelCell Energy 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 FuelCell Energy will offset losses from the drop in FuelCell Energy's long position.The idea behind Zoom Video Communications and FuelCell Energy 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.| FuelCell Energy vs. Lords Grp Trading | FuelCell Energy vs. SilverCrest Metals | FuelCell Energy vs. Coeur Mining | FuelCell Energy vs. Taylor Maritime Investments |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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