Correlation Between Zoom Video and Hyatt Hotels
Can any of the company-specific risk be diversified away by investing in both Zoom Video and Hyatt Hotels 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 Hyatt Hotels 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 Hyatt Hotels, you can compare the effects of market volatilities on Zoom Video and Hyatt Hotels 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 Hyatt Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoom Video and Hyatt Hotels.
Diversification Opportunities for Zoom Video and Hyatt Hotels
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Zoom and Hyatt is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and Hyatt Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyatt Hotels 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 Hyatt Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyatt Hotels has no effect on the direction of Zoom Video i.e., Zoom Video and Hyatt Hotels go up and down completely randomly.
Pair Corralation between Zoom Video and Hyatt Hotels
Assuming the 90 days trading horizon Zoom Video Communications is expected to generate 1.33 times more return on investment than Hyatt Hotels. However, Zoom Video is 1.33 times more volatile than Hyatt Hotels. It trades about 0.09 of its potential returns per unit of risk. Hyatt Hotels is currently generating about 0.07 per unit of risk. If you would invest 6,752 in Zoom Video Communications on October 25, 2024 and sell it today you would earn a total of 772.00 from holding Zoom Video Communications or generate 11.43% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Zoom Video Communications vs. Hyatt Hotels
Performance |
Timeline |
Zoom Video Communications |
Hyatt Hotels |
Zoom Video and Hyatt Hotels Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Zoom Video and Hyatt Hotels
The main advantage of trading using opposite Zoom Video and Hyatt Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zoom Video position performs unexpectedly, Hyatt Hotels 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 Hyatt Hotels will offset losses from the drop in Hyatt Hotels' long position.Zoom Video vs. INSURANCE AUST GRP | Zoom Video vs. UPDATE SOFTWARE | Zoom Video vs. Vienna Insurance Group | Zoom Video vs. PKSHA TECHNOLOGY INC |
Hyatt Hotels vs. PTT Global Chemical | Hyatt Hotels vs. Cognizant Technology Solutions | Hyatt Hotels vs. SCOTT TECHNOLOGY | Hyatt Hotels vs. Shin Etsu Chemical Co |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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