Correlation Between Zoom Video and Bank of America
Can any of the company-specific risk be diversified away by investing in both Zoom Video and Bank of America 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 Bank of America 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 Bank of America, you can compare the effects of market volatilities on Zoom Video and Bank of America 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 Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoom Video and Bank of America.
Diversification Opportunities for Zoom Video and Bank of America
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Zoom and Bank is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and Bank of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of America 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 Bank of America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of America has no effect on the direction of Zoom Video i.e., Zoom Video and Bank of America go up and down completely randomly.
Pair Corralation between Zoom Video and Bank of America
Assuming the 90 days trading horizon Zoom Video Communications is expected to generate 2.83 times more return on investment than Bank of America. However, Zoom Video is 2.83 times more volatile than Bank of America. It trades about -0.11 of its potential returns per unit of risk. Bank of America is currently generating about -0.36 per unit of risk. If you would invest 1,906 in Zoom Video Communications on November 28, 2024 and sell it today you would lose (188.00) from holding Zoom Video Communications or give up 9.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Zoom Video Communications vs. Bank of America
Performance |
| Timeline |
| Zoom Video Communications |
| Bank of America |
Zoom Video and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zoom Video and Bank of America
The main advantage of trading using opposite Zoom Video and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zoom Video position performs unexpectedly, Bank of America 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 Bank of America will offset losses from the drop in Bank of America's long position.| Zoom Video vs. United Rentals | Zoom Video vs. Clover Health Investments, | Zoom Video vs. Charter Communications | Zoom Video vs. Verizon Communications |
| Bank of America vs. Applied Materials, | Bank of America vs. Cognizant Technology Solutions | Bank of America vs. Chunghwa Telecom Co, | Bank of America vs. DENTSPLY SIRONA |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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