Correlation Between Zoom Video and Natural Health
Can any of the company-specific risk be diversified away by investing in both Zoom Video and Natural Health 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 Natural Health 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 Natural Health Trends, you can compare the effects of market volatilities on Zoom Video and Natural Health 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 Natural Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoom Video and Natural Health.
Diversification Opportunities for Zoom Video and Natural Health
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Zoom and Natural is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and Natural Health Trends in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Health Trends 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 Natural Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Health Trends has no effect on the direction of Zoom Video i.e., Zoom Video and Natural Health go up and down completely randomly.
Pair Corralation between Zoom Video and Natural Health
Assuming the 90 days trading horizon Zoom Video is expected to generate 1.73 times less return on investment than Natural Health. But when comparing it to its historical volatility, Zoom Video Communications is 1.26 times less risky than Natural Health. It trades about 0.03 of its potential returns per unit of risk. Natural Health Trends is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 270.00 in Natural Health Trends on September 30, 2024 and sell it today you would earn a total of 136.00 from holding Natural Health Trends or generate 50.37% 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. Natural Health Trends
Performance |
| Timeline |
| Zoom Video Communications |
| Natural Health Trends |
Zoom Video and Natural Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zoom Video and Natural Health
The main advantage of trading using opposite Zoom Video and Natural Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zoom Video position performs unexpectedly, Natural Health 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 Natural Health will offset losses from the drop in Natural Health's long position.The idea behind Zoom Video Communications and Natural Health Trends 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.| Natural Health vs. Apple Inc | Natural Health vs. Apple Inc | Natural Health vs. Apple Inc | Natural Health vs. Apple Inc |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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