Correlation Between Zoom Video and BP Plc
Can any of the company-specific risk be diversified away by investing in both Zoom Video and BP Plc 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 BP Plc 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 BP plc, you can compare the effects of market volatilities on Zoom Video and BP Plc 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 BP Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoom Video and BP Plc.
Diversification Opportunities for Zoom Video and BP Plc
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Zoom and BP-A is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and BP plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP plc 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 BP Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP plc has no effect on the direction of Zoom Video i.e., Zoom Video and BP Plc go up and down completely randomly.
Pair Corralation between Zoom Video and BP Plc
Assuming the 90 days trading horizon Zoom Video Communications is expected to generate 2.22 times more return on investment than BP Plc. However, Zoom Video is 2.22 times more volatile than BP plc. It trades about 0.2 of its potential returns per unit of risk. BP plc is currently generating about -0.21 per unit of risk. If you would invest 7,530 in Zoom Video Communications on August 31, 2024 and sell it today you would earn a total of 1,007 from holding Zoom Video Communications or generate 13.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zoom Video Communications vs. BP plc
Performance |
| Timeline |
| Zoom Video Communications |
| BP plc |
Zoom Video and BP Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zoom Video and BP Plc
The main advantage of trading using opposite Zoom Video and BP Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zoom Video position performs unexpectedly, BP Plc 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 BP Plc will offset losses from the drop in BP Plc's long position.| Zoom Video vs. Induction Healthcare Group | Zoom Video vs. Target Healthcare REIT | Zoom Video vs. HCA Healthcare | Zoom Video vs. Batm Advanced Communications |
| BP Plc vs. Eastinco Mining Exploration | BP Plc vs. International Biotechnology Trust | BP Plc vs. Vulcan Materials Co | BP Plc vs. Morgan Advanced Materials |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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