Correlation Between Zoom Video and FIRST NATIONAL

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

Diversification Opportunities for Zoom Video and FIRST NATIONAL

0.51

Correlation Coefficient

Zoom Video  FIRST NATIONAL

Very weak diversification

The 3 months correlation between Zoom and FIRST is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and FIRST NATIONAL FIN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRST NATIONAL FIN 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 FIRST NATIONAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIRST NATIONAL FIN has no effect on the direction of Zoom Video i.e., Zoom Video and FIRST NATIONAL go up and down completely randomly.

Pair Corralation between Zoom Video and FIRST NATIONAL

Assuming the 90 days trading horizon Zoom Video Communications is expected to under-perform the FIRST NATIONAL. In addition to that, Zoom Video is 1.83 times more volatile than FIRST NATIONAL FIN. It trades about -0.12 of its total potential returns per unit of risk. FIRST NATIONAL FIN is currently generating about -0.02 per unit of volatility. If you would invest  2,580  in FIRST NATIONAL FIN on December 21, 2024 and sell it today you would lose (60.00) from holding FIRST NATIONAL FIN or give up 2.33% of portfolio value over 90 days.

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

Zoom Video Communications  vs.  FIRST NATIONAL FIN

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 fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

FIRST NATIONAL FIN

Risk-Adjusted Performance

Very Weak

Over the last 90 days FIRST NATIONAL FIN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, FIRST NATIONAL is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Zoom Video and FIRST NATIONAL

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

The idea behind Zoom Video Communications and FIRST NATIONAL FIN 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.