Correlation Between Zoom Video and Golden Lake
Can any of the company-specific risk be diversified away by investing in both Zoom Video and Golden Lake 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 Golden Lake 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 Golden Lake Exploration, you can compare the effects of market volatilities on Zoom Video and Golden Lake 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 Golden Lake. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoom Video and Golden Lake.
Diversification Opportunities for Zoom Video and Golden Lake
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Zoom and Golden is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and Golden Lake Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Lake Exploration 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 Golden Lake. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Lake Exploration has no effect on the direction of Zoom Video i.e., Zoom Video and Golden Lake go up and down completely randomly.
Pair Corralation between Zoom Video and Golden Lake
Allowing for the 90-day total investment horizon Zoom Video is expected to generate 3.17 times less return on investment than Golden Lake. But when comparing it to its historical volatility, Zoom Video Communications is 5.24 times less risky than Golden Lake. It trades about 0.05 of its potential returns per unit of risk. Golden Lake Exploration is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 5.50 in Golden Lake Exploration on August 29, 2024 and sell it today you would lose (1.91) from holding Golden Lake Exploration or give up 34.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zoom Video Communications vs. Golden Lake Exploration
Performance |
| Timeline |
| Zoom Video Communications |
| Golden Lake Exploration |
Zoom Video and Golden Lake Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zoom Video and Golden Lake
The main advantage of trading using opposite Zoom Video and Golden Lake positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zoom Video position performs unexpectedly, Golden Lake 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 Golden Lake will offset losses from the drop in Golden Lake's long position.The idea behind Zoom Video Communications and Golden Lake Exploration pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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