Correlation Between Zoom Video and United Airlines
Can any of the company-specific risk be diversified away by investing in both Zoom Video and United Airlines 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 United Airlines 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 United Airlines Holdings, you can compare the effects of market volatilities on Zoom Video and United Airlines 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 United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoom Video and United Airlines.
Diversification Opportunities for Zoom Video and United Airlines
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Zoom and United is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and United Airlines Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Airlines Holdings 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 United Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Airlines Holdings has no effect on the direction of Zoom Video i.e., Zoom Video and United Airlines go up and down completely randomly.
Pair Corralation between Zoom Video and United Airlines
Assuming the 90 days trading horizon Zoom Video Communications is expected to under-perform the United Airlines. But the stock apears to be less risky and, when comparing its historical volatility, Zoom Video Communications is 2.12 times less risky than United Airlines. The stock trades about -0.4 of its potential returns per unit of risk. The United Airlines Holdings is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 10,116 in United Airlines Holdings on October 25, 2024 and sell it today you would earn a total of 834.00 from holding United Airlines Holdings or generate 8.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zoom Video Communications vs. United Airlines Holdings
Performance |
| Timeline |
| Zoom Video Communications |
| United Airlines Holdings |
Zoom Video and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zoom Video and United Airlines
The main advantage of trading using opposite Zoom Video and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zoom Video position performs unexpectedly, United Airlines 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 United Airlines will offset losses from the drop in United Airlines' long position.| Zoom Video vs. Kinnevik Investment AB | Zoom Video vs. Zinc Media Group | Zoom Video vs. Intermediate Capital Group | Zoom Video vs. Hollywood Bowl Group |
| United Airlines vs. Grieg Seafood | United Airlines vs. AfriTin Mining | United Airlines vs. Fevertree Drinks Plc | United Airlines vs. First Majestic Silver |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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