Correlation Between CVS Health and Zoom Video
Can any of the company-specific risk be diversified away by investing in both CVS Health 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 CVS Health and Zoom Video into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS Health and Zoom Video Communications, you can compare the effects of market volatilities on CVS Health 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 CVS Health with a short position of Zoom Video. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Zoom Video.
Diversification Opportunities for CVS Health and Zoom Video
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between CVS and Zoom is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health 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 CVS Health 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 CVS Health 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 CVS Health i.e., CVS Health and Zoom Video go up and down completely randomly.
Pair Corralation between CVS Health and Zoom Video
Assuming the 90 days trading horizon CVS Health is expected to generate 4.13 times less return on investment than Zoom Video. In addition to that, CVS Health is 1.13 times more volatile than Zoom Video Communications. It trades about 0.02 of its total potential returns per unit of risk. Zoom Video Communications is currently generating about 0.08 per unit of volatility. If you would invest 1,371 in Zoom Video Communications on August 27, 2024 and sell it today you would earn a total of 616.00 from holding Zoom Video Communications or generate 44.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.78% |
| Values | Daily Returns |
CVS Health vs. Zoom Video Communications
Performance |
| Timeline |
| CVS Health |
| Zoom Video Communications |
CVS Health and Zoom Video Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Zoom Video
The main advantage of trading using opposite CVS Health and Zoom Video positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health 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.| CVS Health vs. Fras le SA | CVS Health vs. Western Digital | CVS Health vs. Clave Indices De | CVS Health vs. BTG Pactual Logstica |
| Zoom Video vs. Planet Fitness | Zoom Video vs. Autohome | Zoom Video vs. New Oriental Education | Zoom Video vs. STMicroelectronics NV |
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 Stocks Directory module to find actively traded stocks across global markets.
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