Correlation Between Roper Technologies and Zoom Video

Can any of the company-specific risk be diversified away by investing in both Roper Technologies and Zoom Video 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 Roper Technologies and Zoom Video into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Roper Technologies and Zoom Video Communications, you can compare the effects of market volatilities on Roper Technologies and Zoom Video 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 Roper Technologies with a short position of Zoom Video. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roper Technologies and Zoom Video.

Diversification Opportunities for Roper Technologies and Zoom Video

0.12

Correlation Coefficient

Roper Technologies  Zoom Video

Average diversification

The 3 months correlation between Roper and Zoom is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Roper Technologies and Zoom Video Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zoom Video Communications and Roper Technologies 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 Roper Technologies are associated (or correlated) with Zoom Video. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zoom Video Communications has no effect on the direction of Roper Technologies i.e., Roper Technologies and Zoom Video go up and down completely randomly.

Pair Corralation between Roper Technologies and Zoom Video

Assuming the 90 days trading horizon Roper Technologies is expected to under-perform the Zoom Video. But the stock apears to be less risky and, when comparing its historical volatility, Roper Technologies is 1.55 times less risky than Zoom Video. The stock trades about -0.25 of its potential returns per unit of risk. The Zoom Video Communications is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  8,238  in Zoom Video Communications on September 27, 2024 and sell it today you would earn a total of  322.00  from holding Zoom Video Communications or generate 3.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Roper Technologies  vs.  Zoom Video Communications

Roper Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

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

Zoom Video Communications

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zoom Video Communications are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Zoom Video unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Roper Technologies and Zoom Video

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

The idea behind Roper Technologies and Zoom Video Communications 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.