Correlation Between Zoom Video and BROADWIND ENRGY

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

Diversification Opportunities for Zoom Video and BROADWIND ENRGY

-0.58

Correlation Coefficient

Zoom Video  BROADWIND ENRGY

Excellent diversification

The 3 months correlation between Zoom and BROADWIND is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and BROADWIND ENRGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BROADWIND ENRGY 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 BROADWIND ENRGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BROADWIND ENRGY has no effect on the direction of Zoom Video i.e., Zoom Video and BROADWIND ENRGY go up and down completely randomly.

Pair Corralation between Zoom Video and BROADWIND ENRGY

Assuming the 90 days trading horizon Zoom Video Communications is expected to under-perform the BROADWIND ENRGY. But the stock apears to be less risky and, when comparing its historical volatility, Zoom Video Communications is 1.88 times less risky than BROADWIND ENRGY. The stock trades about -0.03 of its potential returns per unit of risk. The BROADWIND ENRGY is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  173.00  in BROADWIND ENRGY on October 10, 2024 and sell it today you would earn a total of  15.00  from holding BROADWIND ENRGY or generate 8.67% return on investment over 90 days.

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

Zoom Video Communications  vs.  BROADWIND ENRGY

Zoom Video Communications

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zoom Video Communications are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Zoom Video unveiled solid returns over the last few months and may actually be approaching a breakup point.

BROADWIND ENRGY

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BROADWIND ENRGY are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, BROADWIND ENRGY may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Zoom Video and BROADWIND ENRGY

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

The idea behind Zoom Video Communications and BROADWIND ENRGY 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.