Correlation Between Zoom Video and Onto Innovation
Can any of the company-specific risk be diversified away by investing in both Zoom Video and Onto Innovation 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 Onto Innovation 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 Onto Innovation, you can compare the effects of market volatilities on Zoom Video and Onto Innovation 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 Onto Innovation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoom Video and Onto Innovation.
Diversification Opportunities for Zoom Video and Onto Innovation
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Zoom and Onto is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and Onto Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Onto Innovation 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 Onto Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Onto Innovation has no effect on the direction of Zoom Video i.e., Zoom Video and Onto Innovation go up and down completely randomly.
Pair Corralation between Zoom Video and Onto Innovation
Allowing for the 90-day total investment horizon Zoom Video is expected to generate 4.39 times less return on investment than Onto Innovation. But when comparing it to its historical volatility, Zoom Video Communications is 1.46 times less risky than Onto Innovation. It trades about 0.02 of its potential returns per unit of risk. Onto Innovation is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 8,257 in Onto Innovation on August 27, 2024 and sell it today you would earn a total of 8,372 from holding Onto Innovation or generate 101.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zoom Video Communications vs. Onto Innovation
Performance |
| Timeline |
| Zoom Video Communications |
| Onto Innovation |
Zoom Video and Onto Innovation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zoom Video and Onto Innovation
The main advantage of trading using opposite Zoom Video and Onto Innovation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zoom Video position performs unexpectedly, Onto Innovation 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 Onto Innovation will offset losses from the drop in Onto Innovation's long position.The idea behind Zoom Video Communications and Onto Innovation 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.| Onto Innovation vs. Camtek | Onto Innovation vs. Amtech Systems | Onto Innovation vs. Veeco Instruments | Onto Innovation vs. Ichor Holdings |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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