Correlation Between Zoom Video and Chesapeake Utilities
Can any of the company-specific risk be diversified away by investing in both Zoom Video and Chesapeake Utilities 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 Chesapeake Utilities 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 Chesapeake Utilities, you can compare the effects of market volatilities on Zoom Video and Chesapeake Utilities 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 Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoom Video and Chesapeake Utilities.
Diversification Opportunities for Zoom Video and Chesapeake Utilities
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Zoom and Chesapeake is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities 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 Chesapeake Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Utilities has no effect on the direction of Zoom Video i.e., Zoom Video and Chesapeake Utilities go up and down completely randomly.
Pair Corralation between Zoom Video and Chesapeake Utilities
Assuming the 90 days trading horizon Zoom Video Communications is expected to generate 1.54 times more return on investment than Chesapeake Utilities. However, Zoom Video is 1.54 times more volatile than Chesapeake Utilities. It trades about -0.02 of its potential returns per unit of risk. Chesapeake Utilities is currently generating about -0.31 per unit of risk. If you would invest 7,933 in Zoom Video Communications on October 11, 2024 and sell it today you would lose (72.00) from holding Zoom Video Communications or give up 0.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zoom Video Communications vs. Chesapeake Utilities
Performance |
| Timeline |
| Zoom Video Communications |
| Chesapeake Utilities |
Zoom Video and Chesapeake Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zoom Video and Chesapeake Utilities
The main advantage of trading using opposite Zoom Video and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zoom Video position performs unexpectedly, Chesapeake Utilities 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 Chesapeake Utilities will offset losses from the drop in Chesapeake Utilities' long position.| Zoom Video vs. China Communications Services | Zoom Video vs. Entravision Communications | Zoom Video vs. Shenandoah Telecommunications | Zoom Video vs. Singapore Telecommunications Limited |
| Chesapeake Utilities vs. Firan Technology Group | Chesapeake Utilities vs. T MOBILE US | Chesapeake Utilities vs. T Mobile | Chesapeake Utilities 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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