Correlation Between Zoom Video and Scandic Hotels
Can any of the company-specific risk be diversified away by investing in both Zoom Video and Scandic Hotels 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 Scandic Hotels 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 Scandic Hotels Group, you can compare the effects of market volatilities on Zoom Video and Scandic Hotels 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 Scandic Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoom Video and Scandic Hotels.
Diversification Opportunities for Zoom Video and Scandic Hotels
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Zoom and Scandic is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and Scandic Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandic Hotels Group 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 Scandic Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandic Hotels Group has no effect on the direction of Zoom Video i.e., Zoom Video and Scandic Hotels go up and down completely randomly.
Pair Corralation between Zoom Video and Scandic Hotels
Assuming the 90 days trading horizon Zoom Video is expected to generate 2.25 times less return on investment than Scandic Hotels. In addition to that, Zoom Video is 1.12 times more volatile than Scandic Hotels Group. It trades about 0.03 of its total potential returns per unit of risk. Scandic Hotels Group is currently generating about 0.09 per unit of volatility. If you would invest 3,166 in Scandic Hotels Group on September 24, 2024 and sell it today you would earn a total of 3,514 from holding Scandic Hotels Group or generate 110.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Zoom Video Communications vs. Scandic Hotels Group
Performance |
| Timeline |
| Zoom Video Communications |
| Scandic Hotels Group |
Zoom Video and Scandic Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zoom Video and Scandic Hotels
The main advantage of trading using opposite Zoom Video and Scandic Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zoom Video position performs unexpectedly, Scandic Hotels 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 Scandic Hotels will offset losses from the drop in Scandic Hotels' long position.| Zoom Video vs. Enbridge | Zoom Video vs. Endo International PLC | Zoom Video vs. Bath Body Works | Zoom Video vs. Rio Tinto PLC |
| Scandic Hotels vs. Public Storage | Scandic Hotels vs. Foresight Environmental Infrastructure | Scandic Hotels vs. GlobalData PLC | Scandic Hotels vs. British American Tobacco |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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