Correlation Between Zoom Video and British American
Can any of the company-specific risk be diversified away by investing in both Zoom Video and British American 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 British American 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 British American Tobacco, you can compare the effects of market volatilities on Zoom Video and British American 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 British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoom Video and British American.
Diversification Opportunities for Zoom Video and British American
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Zoom and British is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American Tobacco 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 British American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of Zoom Video i.e., Zoom Video and British American go up and down completely randomly.
Pair Corralation between Zoom Video and British American
Assuming the 90 days trading horizon Zoom Video is expected to generate 1.13 times less return on investment than British American. In addition to that, Zoom Video is 1.46 times more volatile than British American Tobacco. It trades about 0.07 of its total potential returns per unit of risk. British American Tobacco is currently generating about 0.11 per unit of volatility. If you would invest 2,770 in British American Tobacco on August 29, 2024 and sell it today you would earn a total of 983.00 from holding British American Tobacco or generate 35.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.53% |
| Values | Daily Returns |
Zoom Video Communications vs. British American Tobacco
Performance |
| Timeline |
| Zoom Video Communications |
| British American Tobacco |
Zoom Video and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zoom Video and British American
The main advantage of trading using opposite Zoom Video and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zoom Video position performs unexpectedly, British American 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 British American will offset losses from the drop in British American's long position.| Zoom Video vs. Lendinvest PLC | Zoom Video vs. Neometals | Zoom Video vs. Coor Service Management | Zoom Video vs. Albion Technology General |
| British American vs. Lendinvest PLC | British American vs. Neometals | British American vs. Coor Service Management | British American vs. Albion Technology General |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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