Correlation Between Zoom Video and Ibstock PLC

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

Diversification Opportunities for Zoom Video and Ibstock PLC

-0.23

Correlation Coefficient

Zoom Video  Ibstock PLC

Very good diversification

The 3 months correlation between Zoom and Ibstock is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and Ibstock PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ibstock PLC 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 Ibstock PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ibstock PLC has no effect on the direction of Zoom Video i.e., Zoom Video and Ibstock PLC go up and down completely randomly.

Pair Corralation between Zoom Video and Ibstock PLC

Assuming the 90 days trading horizon Zoom Video Communications is expected to generate 1.2 times more return on investment than Ibstock PLC. However, Zoom Video is 1.2 times more volatile than Ibstock PLC. It trades about 0.07 of its potential returns per unit of risk. Ibstock PLC is currently generating about -0.18 per unit of risk. If you would invest  7,275  in Zoom Video Communications on October 25, 2024 and sell it today you would earn a total of  584.00  from holding Zoom Video Communications or generate 8.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Zoom Video Communications  vs.  Ibstock PLC

Zoom Video Communications

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zoom Video Communications are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Zoom Video may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Ibstock PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ibstock PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Zoom Video and Ibstock PLC

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

The idea behind Zoom Video Communications and Ibstock PLC 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.