Correlation Between Zoom Video and Veolia Environnement

Can any of the company-specific risk be diversified away by investing in both Zoom Video and Veolia Environnement 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 Veolia Environnement 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 Veolia Environnement VE, you can compare the effects of market volatilities on Zoom Video and Veolia Environnement 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 Veolia Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoom Video and Veolia Environnement.

Diversification Opportunities for Zoom Video and Veolia Environnement

0.21

Correlation Coefficient

Zoom Video  Veolia Environnement

Modest diversification

The 3 months correlation between Zoom and Veolia is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and Veolia Environnement VE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veolia Environnement 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 Veolia Environnement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veolia Environnement has no effect on the direction of Zoom Video i.e., Zoom Video and Veolia Environnement go up and down completely randomly.

Pair Corralation between Zoom Video and Veolia Environnement

Assuming the 90 days trading horizon Zoom Video is expected to generate 44.27 times less return on investment than Veolia Environnement. In addition to that, Zoom Video is 1.57 times more volatile than Veolia Environnement VE. It trades about 0.0 of its total potential returns per unit of risk. Veolia Environnement VE is currently generating about 0.25 per unit of volatility. If you would invest  2,698  in Veolia Environnement VE on December 30, 2024 and sell it today you would earn a total of  523.00  from holding Veolia Environnement VE or generate 19.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	63.08%
Values	Daily Returns

Zoom Video Communications  vs.  Veolia Environnement VE

Zoom Video Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zoom Video Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Zoom Video is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Veolia Environnement

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Veolia Environnement VE are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Veolia Environnement unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zoom Video and Veolia Environnement

The main advantage of trading using opposite Zoom Video and Veolia Environnement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zoom Video position performs unexpectedly, Veolia Environnement 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 Veolia Environnement will offset losses from the drop in Veolia Environnement's long position.

The idea behind Zoom Video Communications and Veolia Environnement VE 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.