Correlation Between Zoom Video and Fortescue Metals
Can any of the company-specific risk be diversified away by investing in both Zoom Video and Fortescue Metals 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 Fortescue Metals 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 Fortescue Metals Group, you can compare the effects of market volatilities on Zoom Video and Fortescue Metals 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 Fortescue Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoom Video and Fortescue Metals.
Diversification Opportunities for Zoom Video and Fortescue Metals
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Zoom and Fortescue is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and Fortescue Metals Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortescue Metals 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 Fortescue Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortescue Metals has no effect on the direction of Zoom Video i.e., Zoom Video and Fortescue Metals go up and down completely randomly.
Pair Corralation between Zoom Video and Fortescue Metals
Assuming the 90 days trading horizon Zoom Video Communications is expected to under-perform the Fortescue Metals. But the stock apears to be less risky and, when comparing its historical volatility, Zoom Video Communications is 1.58 times less risky than Fortescue Metals. The stock trades about -0.11 of its potential returns per unit of risk. The Fortescue Metals Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,110 in Fortescue Metals Group on October 30, 2024 and sell it today you would earn a total of 12.00 from holding Fortescue Metals Group or generate 1.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zoom Video Communications vs. Fortescue Metals Group
Performance |
| Timeline |
| Zoom Video Communications |
| Fortescue Metals |
Zoom Video and Fortescue Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zoom Video and Fortescue Metals
The main advantage of trading using opposite Zoom Video and Fortescue Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zoom Video position performs unexpectedly, Fortescue Metals 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 Fortescue Metals will offset losses from the drop in Fortescue Metals' long position.| Zoom Video vs. Ringmetall SE | Zoom Video vs. Perseus Mining Limited | Zoom Video vs. Western Copper and | Zoom Video vs. PATTIES FOODS |
| Fortescue Metals vs. THRACE PLASTICS | Fortescue Metals vs. Compagnie Plastic Omnium | Fortescue Metals vs. Heidelberg Materials AG | Fortescue Metals vs. Easy Software AG |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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