Correlation Between BP PLC and Zoom Video
Can any of the company-specific risk be diversified away by investing in both BP PLC 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 BP PLC and Zoom Video into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BP PLC and Zoom Video Communications, you can compare the effects of market volatilities on BP PLC 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 BP PLC with a short position of Zoom Video. Check out your portfolio center. Please also check ongoing floating volatility patterns of BP PLC and Zoom Video.
Diversification Opportunities for BP PLC and Zoom Video
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BP PLC and Zoom is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding BP PLC 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 BP PLC 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 BP PLC 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 BP PLC i.e., BP PLC and Zoom Video go up and down completely randomly.
Pair Corralation between BP PLC and Zoom Video
Assuming the 90 days trading horizon BP PLC is expected to under-perform the Zoom Video. But the stock apears to be less risky and, when comparing its historical volatility, BP PLC is 1.43 times less risky than Zoom Video. The stock trades about -0.03 of its potential returns per unit of risk. The Zoom Video Communications is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 7,602 in Zoom Video Communications on November 2, 2024 and sell it today you would earn a total of 1,181 from holding Zoom Video Communications or generate 15.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
BP PLC vs. Zoom Video Communications
Performance |
| Timeline |
| BP PLC |
| Zoom Video Communications |
BP PLC and Zoom Video Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BP PLC and Zoom Video
The main advantage of trading using opposite BP PLC and Zoom Video positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BP PLC 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.| BP PLC vs. Wheaton Precious Metals | BP PLC vs. Gear4music Plc | BP PLC vs. CNH Industrial NV | BP PLC vs. Empire Metals Limited |
| Zoom Video vs. Gamma Communications PLC | Zoom Video vs. bet at home AG | Zoom Video vs. STMicroelectronics NV | Zoom Video vs. Zegona Communications Plc |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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