Correlation Between Caledonia Investments and Zoom Video
Can any of the company-specific risk be diversified away by investing in both Caledonia Investments 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 Caledonia Investments and Zoom Video into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caledonia Investments and Zoom Video Communications, you can compare the effects of market volatilities on Caledonia Investments 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 Caledonia Investments with a short position of Zoom Video. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caledonia Investments and Zoom Video.
Diversification Opportunities for Caledonia Investments and Zoom Video
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Caledonia and Zoom is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Caledonia Investments 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 Caledonia Investments 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 Caledonia Investments 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 Caledonia Investments i.e., Caledonia Investments and Zoom Video go up and down completely randomly.
Pair Corralation between Caledonia Investments and Zoom Video
Assuming the 90 days trading horizon Caledonia Investments is expected to generate 0.95 times more return on investment than Zoom Video. However, Caledonia Investments is 1.06 times less risky than Zoom Video. It trades about 0.22 of its potential returns per unit of risk. Zoom Video Communications is currently generating about -0.38 per unit of risk. If you would invest 351,000 in Caledonia Investments on October 21, 2024 and sell it today you would earn a total of 14,000 from holding Caledonia Investments or generate 3.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Caledonia Investments vs. Zoom Video Communications
Performance |
| Timeline |
| Caledonia Investments |
| Zoom Video Communications |
Caledonia Investments and Zoom Video Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caledonia Investments and Zoom Video
The main advantage of trading using opposite Caledonia Investments and Zoom Video positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caledonia Investments 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.| Caledonia Investments vs. Bioventix | Caledonia Investments vs. VeriSign | Caledonia Investments vs. Games Workshop Group | Caledonia Investments vs. AJ Bell plc |
| Zoom Video vs. Aeorema Communications Plc | Zoom Video vs. Verizon Communications | Zoom Video vs. Zegona Communications Plc | Zoom Video vs. Public Storage |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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