Correlation Between Zoom Video and Occidental Petroleum
Can any of the company-specific risk be diversified away by investing in both Zoom Video and Occidental Petroleum 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 Occidental Petroleum 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 Occidental Petroleum, you can compare the effects of market volatilities on Zoom Video and Occidental Petroleum 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 Occidental Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoom Video and Occidental Petroleum.
Diversification Opportunities for Zoom Video and Occidental Petroleum
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Zoom and Occidental is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and Occidental Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Occidental Petroleum 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 Occidental Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Occidental Petroleum has no effect on the direction of Zoom Video i.e., Zoom Video and Occidental Petroleum go up and down completely randomly.
Pair Corralation between Zoom Video and Occidental Petroleum
Assuming the 90 days trading horizon Zoom Video Communications is expected to generate 1.1 times more return on investment than Occidental Petroleum. However, Zoom Video is 1.1 times more volatile than Occidental Petroleum. It trades about -0.01 of its potential returns per unit of risk. Occidental Petroleum is currently generating about -0.23 per unit of risk. If you would invest 2,015 in Zoom Video Communications on November 7, 2024 and sell it today you would lose (21.00) from holding Zoom Video Communications or give up 1.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zoom Video Communications vs. Occidental Petroleum
Performance |
| Timeline |
| Zoom Video Communications |
| Occidental Petroleum |
Zoom Video and Occidental Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zoom Video and Occidental Petroleum
The main advantage of trading using opposite Zoom Video and Occidental Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zoom Video position performs unexpectedly, Occidental Petroleum 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 Occidental Petroleum will offset losses from the drop in Occidental Petroleum's long position.| Zoom Video vs. Unity Software | Zoom Video vs. Ameriprise Financial | Zoom Video vs. Synchrony Financial | Zoom Video vs. LPL Financial Holdings |
| Occidental Petroleum vs. United States Steel | Occidental Petroleum vs. JB Hunt Transport | Occidental Petroleum vs. Metalrgica Riosulense SA | Occidental Petroleum vs. Beyond Meat |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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