Correlation Between Zoom Video and American Airlines
Can any of the company-specific risk be diversified away by investing in both Zoom Video and American Airlines 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 Zoom Video and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zoom Video Communications and American Airlines Group, you can compare the effects of market volatilities on Zoom Video and American Airlines 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 Zoom Video with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoom Video and American Airlines.
Diversification Opportunities for Zoom Video and American Airlines
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Zoom and American is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Zoom Video 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 Zoom Video Communications are associated (or correlated) with American Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Airlines has no effect on the direction of Zoom Video i.e., Zoom Video and American Airlines go up and down completely randomly.
Pair Corralation between Zoom Video and American Airlines
Assuming the 90 days trading horizon Zoom Video Communications is expected to generate 0.88 times more return on investment than American Airlines. However, Zoom Video Communications is 1.14 times less risky than American Airlines. It trades about 0.04 of its potential returns per unit of risk. American Airlines Group is currently generating about 0.01 per unit of risk. If you would invest 1,260 in Zoom Video Communications on December 26, 2024 and sell it today you would earn a total of 509.00 from holding Zoom Video Communications or generate 40.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zoom Video Communications vs. American Airlines Group
Performance |
| Timeline |
| Zoom Video Communications |
| American Airlines |
Zoom Video and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zoom Video and American Airlines
The main advantage of trading using opposite Zoom Video and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zoom Video position performs unexpectedly, American Airlines 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 American Airlines will offset losses from the drop in American Airlines' long position.| Zoom Video vs. Credit Acceptance | Zoom Video vs. Bread Financial Holdings | Zoom Video vs. ICICI Bank Limited | Zoom Video vs. Cognizant Technology Solutions |
| American Airlines vs. Tres Tentos Agroindustrial | American Airlines vs. Uber Technologies | American Airlines vs. MAHLE Metal Leve | American Airlines vs. TechnipFMC plc |
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 CEOs Directory module to screen CEOs from public companies around the world.
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