Correlation Between Zoom Video and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Zoom Video and Coca Cola 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 Coca Cola 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 Coca Cola HBC, you can compare the effects of market volatilities on Zoom Video and Coca Cola 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 Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoom Video and Coca Cola.
Diversification Opportunities for Zoom Video and Coca Cola
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Zoom and Coca is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and Coca Cola HBC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola HBC 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 Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola HBC has no effect on the direction of Zoom Video i.e., Zoom Video and Coca Cola go up and down completely randomly.
Pair Corralation between Zoom Video and Coca Cola
Assuming the 90 days trading horizon Zoom Video is expected to generate 1.23 times less return on investment than Coca Cola. In addition to that, Zoom Video is 1.48 times more volatile than Coca Cola HBC. It trades about 0.04 of its total potential returns per unit of risk. Coca Cola HBC is currently generating about 0.07 per unit of volatility. If you would invest 2,137 in Coca Cola HBC on September 14, 2024 and sell it today you would earn a total of 1,233 from holding Coca Cola HBC or generate 57.7% 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. Coca Cola HBC
Performance |
| Timeline |
| Zoom Video Communications |
| Coca Cola HBC |
Zoom Video and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zoom Video and Coca Cola
The main advantage of trading using opposite Zoom Video and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zoom Video position performs unexpectedly, Coca Cola 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 Coca Cola will offset losses from the drop in Coca Cola's long position.The idea behind Zoom Video Communications and Coca Cola HBC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Coca Cola vs. Darden Restaurants | Coca Cola vs. Entravision Communications | Coca Cola vs. Verizon Communications | Coca Cola vs. Zoom Video Communications |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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