Correlation Between Zoom Video and NIBE Industrier
Can any of the company-specific risk be diversified away by investing in both Zoom Video and NIBE Industrier 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 NIBE Industrier 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 NIBE Industrier AB, you can compare the effects of market volatilities on Zoom Video and NIBE Industrier 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 NIBE Industrier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoom Video and NIBE Industrier.
Diversification Opportunities for Zoom Video and NIBE Industrier
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Zoom and NIBE is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and NIBE Industrier AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIBE Industrier AB 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 NIBE Industrier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIBE Industrier AB has no effect on the direction of Zoom Video i.e., Zoom Video and NIBE Industrier go up and down completely randomly.
Pair Corralation between Zoom Video and NIBE Industrier
Allowing for the 90-day total investment horizon Zoom Video Communications is expected to generate 1.09 times more return on investment than NIBE Industrier. However, Zoom Video is 1.09 times more volatile than NIBE Industrier AB. It trades about 0.23 of its potential returns per unit of risk. NIBE Industrier AB is currently generating about -0.21 per unit of risk. If you would invest 7,478 in Zoom Video Communications on August 31, 2024 and sell it today you would earn a total of 1,058 from holding Zoom Video Communications or generate 14.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zoom Video Communications vs. NIBE Industrier AB
Performance |
| Timeline |
| Zoom Video Communications |
| NIBE Industrier AB |
Zoom Video and NIBE Industrier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zoom Video and NIBE Industrier
The main advantage of trading using opposite Zoom Video and NIBE Industrier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zoom Video position performs unexpectedly, NIBE Industrier 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 NIBE Industrier will offset losses from the drop in NIBE Industrier's long position.The idea behind Zoom Video Communications and NIBE Industrier AB 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.| NIBE Industrier vs. Daikin Industries Ltd | NIBE Industrier vs. Trane Technologies plc | NIBE Industrier vs. AAON Inc | NIBE Industrier vs. Johnson Controls International |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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