Correlation Between LBG Media and Zoom Video
Can any of the company-specific risk be diversified away by investing in both LBG Media 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 LBG Media and Zoom Video into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LBG Media PLC and Zoom Video Communications, you can compare the effects of market volatilities on LBG Media 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 LBG Media with a short position of Zoom Video. Check out your portfolio center. Please also check ongoing floating volatility patterns of LBG Media and Zoom Video.
Diversification Opportunities for LBG Media and Zoom Video
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LBG and Zoom is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding LBG Media 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 LBG Media 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 LBG Media 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 LBG Media i.e., LBG Media and Zoom Video go up and down completely randomly.
Pair Corralation between LBG Media and Zoom Video
Assuming the 90 days trading horizon LBG Media PLC is expected to generate 1.26 times more return on investment than Zoom Video. However, LBG Media is 1.26 times more volatile than Zoom Video Communications. It trades about 0.06 of its potential returns per unit of risk. Zoom Video Communications is currently generating about 0.03 per unit of risk. If you would invest 6,700 in LBG Media PLC on August 30, 2024 and sell it today you would earn a total of 6,000 from holding LBG Media PLC or generate 89.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
LBG Media PLC vs. Zoom Video Communications
Performance |
| Timeline |
| LBG Media PLC |
| Zoom Video Communications |
LBG Media and Zoom Video Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LBG Media and Zoom Video
The main advantage of trading using opposite LBG Media and Zoom Video positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LBG Media 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.| LBG Media vs. Walmart | LBG Media vs. BYD Co | LBG Media vs. Volkswagen AG | LBG Media vs. Volkswagen AG Non Vtg |
| Zoom Video vs. Lendinvest PLC | Zoom Video vs. Neometals | Zoom Video vs. Coor Service Management | Zoom Video vs. Albion Technology General |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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