Correlation Between Sterling Construction and Zoom Video
Can any of the company-specific risk be diversified away by investing in both Sterling Construction 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 Sterling Construction and Zoom Video into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Construction and Zoom Video Communications, you can compare the effects of market volatilities on Sterling Construction 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 Sterling Construction with a short position of Zoom Video. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Construction and Zoom Video.
Diversification Opportunities for Sterling Construction and Zoom Video
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sterling and Zoom is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Construction 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 Sterling Construction 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 Sterling Construction 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 Sterling Construction i.e., Sterling Construction and Zoom Video go up and down completely randomly.
Pair Corralation between Sterling Construction and Zoom Video
Assuming the 90 days horizon Sterling Construction is expected to under-perform the Zoom Video. In addition to that, Sterling Construction is 1.51 times more volatile than Zoom Video Communications. It trades about -0.29 of its total potential returns per unit of risk. Zoom Video Communications is currently generating about -0.3 per unit of volatility. If you would invest 8,441 in Zoom Video Communications on December 11, 2024 and sell it today you would lose (1,486) from holding Zoom Video Communications or give up 17.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Construction vs. Zoom Video Communications
Performance |
| Timeline |
| Sterling Construction |
| Zoom Video Communications |
Sterling Construction and Zoom Video Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Construction and Zoom Video
The main advantage of trading using opposite Sterling Construction and Zoom Video positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Construction 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.| Sterling Construction vs. DEVRY EDUCATION GRP | Sterling Construction vs. Fevertree Drinks PLC | Sterling Construction vs. TYSON FOODS A | Sterling Construction vs. COFCO Joycome Foods |
| Zoom Video vs. CN DATANG C | Zoom Video vs. UNIVMUSIC GRPADR050 | Zoom Video vs. Major Drilling Group | Zoom Video vs. PRECISION DRILLING P |
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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