Correlation Between Zoom Video and British American
Can any of the company-specific risk be diversified away by investing in both Zoom Video and British American 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 British American 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 British American Tobacco, you can compare the effects of market volatilities on Zoom Video and British American 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 British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoom Video and British American.
Diversification Opportunities for Zoom Video and British American
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Zoom and British is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American Tobacco 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 British American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of Zoom Video i.e., Zoom Video and British American go up and down completely randomly.
Pair Corralation between Zoom Video and British American
Assuming the 90 days trading horizon Zoom Video is expected to generate 17.83 times less return on investment than British American. But when comparing it to its historical volatility, Zoom Video Communications is 1.5 times less risky than British American. It trades about 0.0 of its potential returns per unit of risk. British American Tobacco is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4,524 in British American Tobacco on November 4, 2024 and sell it today you would earn a total of 89.00 from holding British American Tobacco or generate 1.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zoom Video Communications vs. British American Tobacco
Performance |
| Timeline |
| Zoom Video Communications |
| British American Tobacco |
Zoom Video and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zoom Video and British American
The main advantage of trading using opposite Zoom Video and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zoom Video position performs unexpectedly, British American 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 British American will offset losses from the drop in British American's long position.| Zoom Video vs. Guidewire Software, | Zoom Video vs. Seagate Technology Holdings | Zoom Video vs. GP Investments | Zoom Video vs. Iron Mountain Incorporated |
| British American vs. Zoom Video Communications | British American vs. Applied Materials, | British American vs. Multilaser Industrial SA | British American vs. Darden Restaurants, |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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