Correlation Between General Motors and Zoom Video
Can any of the company-specific risk be diversified away by investing in both General Motors and Zoom Video 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 General Motors and Zoom Video into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors Co and Zoom Video Communications, you can compare the effects of market volatilities on General Motors and Zoom Video 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 General Motors with a short position of Zoom Video. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Motors and Zoom Video.
Diversification Opportunities for General Motors and Zoom Video
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between General and Zoom is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding General Motors Co and Zoom Video Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zoom Video Communications and General Motors 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 General Motors Co are associated (or correlated) with Zoom Video. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zoom Video Communications has no effect on the direction of General Motors i.e., General Motors and Zoom Video go up and down completely randomly.
Pair Corralation between General Motors and Zoom Video
Assuming the 90 days trading horizon General Motors Co is expected to generate 2.31 times more return on investment than Zoom Video. However, General Motors is 2.31 times more volatile than Zoom Video Communications. It trades about 0.04 of its potential returns per unit of risk. Zoom Video Communications is currently generating about -0.4 per unit of risk. If you would invest 5,270 in General Motors Co on October 25, 2024 and sell it today you would earn a total of 70.00 from holding General Motors Co or generate 1.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors Co vs. Zoom Video Communications
Performance |
| Timeline |
| General Motors |
| Zoom Video Communications |
General Motors and Zoom Video Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Motors and Zoom Video
The main advantage of trading using opposite General Motors and Zoom Video positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Motors position performs unexpectedly, Zoom Video 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 Zoom Video will offset losses from the drop in Zoom Video's long position.| General Motors vs. Alaska Air Group | General Motors vs. Gear4music Plc | General Motors vs. Pentair PLC | General Motors vs. JD Sports Fashion |
| Zoom Video vs. Kinnevik Investment AB | Zoom Video vs. Zinc Media Group | Zoom Video vs. Intermediate Capital Group | Zoom Video vs. Hollywood Bowl Group |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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