Correlation Between GB Group and Zoom Video
Can any of the company-specific risk be diversified away by investing in both GB Group 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 GB Group and Zoom Video into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GB Group plc and Zoom Video Communications, you can compare the effects of market volatilities on GB Group 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 GB Group with a short position of Zoom Video. Check out your portfolio center. Please also check ongoing floating volatility patterns of GB Group and Zoom Video.
Diversification Opportunities for GB Group and Zoom Video
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GBG and Zoom is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding GB Group 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 GB Group 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 GB Group 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 GB Group i.e., GB Group and Zoom Video go up and down completely randomly.
Pair Corralation between GB Group and Zoom Video
Assuming the 90 days trading horizon GB Group plc is expected to generate 1.32 times more return on investment than Zoom Video. However, GB Group is 1.32 times more volatile than Zoom Video Communications. It trades about 0.19 of its potential returns per unit of risk. Zoom Video Communications is currently generating about 0.22 per unit of risk. If you would invest 29,900 in GB Group plc on September 3, 2024 and sell it today you would earn a total of 7,960 from holding GB Group plc or generate 26.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GB Group plc vs. Zoom Video Communications
Performance |
| Timeline |
| GB Group plc |
| Zoom Video Communications |
GB Group and Zoom Video Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GB Group and Zoom Video
The main advantage of trading using opposite GB Group and Zoom Video positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GB Group 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.| GB Group vs. Naked Wines plc | GB Group vs. Europa Metals | GB Group vs. Power Metal Resources | GB Group vs. InterContinental Hotels Group |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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