Correlation Between Bread Financial and Zoom Video
Can any of the company-specific risk be diversified away by investing in both Bread Financial 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 Bread Financial and Zoom Video into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bread Financial Holdings and Zoom Video Communications, you can compare the effects of market volatilities on Bread Financial 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 Bread Financial with a short position of Zoom Video. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bread Financial and Zoom Video.
Diversification Opportunities for Bread Financial and Zoom Video
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bread and Zoom is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Bread Financial Holdings 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 Bread Financial 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 Bread Financial Holdings 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 Bread Financial i.e., Bread Financial and Zoom Video go up and down completely randomly.
Pair Corralation between Bread Financial and Zoom Video
Assuming the 90 days trading horizon Bread Financial is expected to generate 1.14 times less return on investment than Zoom Video. In addition to that, Bread Financial is 1.64 times more volatile than Zoom Video Communications. It trades about 0.16 of its total potential returns per unit of risk. Zoom Video Communications is currently generating about 0.31 per unit of volatility. If you would invest 1,680 in Zoom Video Communications on August 27, 2024 and sell it today you would earn a total of 307.00 from holding Zoom Video Communications or generate 18.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bread Financial Holdings vs. Zoom Video Communications
Performance |
| Timeline |
| Bread Financial Holdings |
| Zoom Video Communications |
Bread Financial and Zoom Video Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bread Financial and Zoom Video
The main advantage of trading using opposite Bread Financial and Zoom Video positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bread Financial 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.| Bread Financial vs. Capital One Financial | Bread Financial vs. Fras le SA | Bread Financial vs. Clave Indices De | Bread Financial vs. BTG Pactual Logstica |
| Zoom Video vs. Apartment Investment and | Zoom Video vs. Telecomunicaes Brasileiras SA | Zoom Video vs. United Rentals | Zoom Video vs. Tyson Foods |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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