Correlation Between Zoom Video and UnitedHealth Group
Can any of the company-specific risk be diversified away by investing in both Zoom Video and UnitedHealth Group 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 UnitedHealth Group 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 UnitedHealth Group Incorporated, you can compare the effects of market volatilities on Zoom Video and UnitedHealth Group 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 UnitedHealth Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoom Video and UnitedHealth Group.
Diversification Opportunities for Zoom Video and UnitedHealth Group
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Zoom and UnitedHealth is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and UnitedHealth Group Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UnitedHealth Group 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 UnitedHealth Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UnitedHealth Group has no effect on the direction of Zoom Video i.e., Zoom Video and UnitedHealth Group go up and down completely randomly.
Pair Corralation between Zoom Video and UnitedHealth Group
Assuming the 90 days trading horizon Zoom Video Communications is expected to generate 1.41 times more return on investment than UnitedHealth Group. However, Zoom Video is 1.41 times more volatile than UnitedHealth Group Incorporated. It trades about 0.24 of its potential returns per unit of risk. UnitedHealth Group Incorporated is currently generating about 0.27 per unit of risk. If you would invest 1,750 in Zoom Video Communications on August 30, 2024 and sell it today you would earn a total of 258.00 from holding Zoom Video Communications or generate 14.74% 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. UnitedHealth Group Incorporate
Performance |
| Timeline |
| Zoom Video Communications |
| UnitedHealth Group |
Zoom Video and UnitedHealth Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zoom Video and UnitedHealth Group
The main advantage of trading using opposite Zoom Video and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zoom Video position performs unexpectedly, UnitedHealth Group 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 UnitedHealth Group will offset losses from the drop in UnitedHealth Group's long position.| Zoom Video vs. The Home Depot | Zoom Video vs. United States Steel | Zoom Video vs. Brpr Corporate Offices | Zoom Video vs. STMicroelectronics NV |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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