Correlation Between Zoom Video and Wix
Can any of the company-specific risk be diversified away by investing in both Zoom Video and Wix 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 Wix 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 Wix, you can compare the effects of market volatilities on Zoom Video and Wix 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 Wix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoom Video and Wix.
Diversification Opportunities for Zoom Video and Wix
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Zoom and Wix is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and Wix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wix 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 Wix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wix has no effect on the direction of Zoom Video i.e., Zoom Video and Wix go up and down completely randomly.
Pair Corralation between Zoom Video and Wix
Assuming the 90 days trading horizon Zoom Video is expected to generate 2.66 times less return on investment than Wix. But when comparing it to its historical volatility, Zoom Video Communications is 1.25 times less risky than Wix. It trades about 0.04 of its potential returns per unit of risk. Wix is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,396 in Wix on October 7, 2024 and sell it today you would earn a total of 3,155 from holding Wix or generate 226.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Zoom Video Communications vs. Wix
Performance |
| Timeline |
| Zoom Video Communications |
| Wix |
Zoom Video and Wix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zoom Video and Wix
The main advantage of trading using opposite Zoom Video and Wix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zoom Video position performs unexpectedly, Wix 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 Wix will offset losses from the drop in Wix's long position.| Zoom Video vs. Beyond Meat | Zoom Video vs. Ross Stores | Zoom Video vs. Tyson Foods | Zoom Video vs. Clover Health Investments, |
| Wix vs. Take Two Interactive Software | Wix vs. Global X Funds | Wix vs. GP Investments | Wix vs. Zoom Video Communications |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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