Correlation Between NIGHTINGALE HEALTH and Zoom Video

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

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

Diversification Opportunities for NIGHTINGALE HEALTH and Zoom Video

-0.4

Correlation Coefficient

NIGHTINGALE HEALTH  Zoom Video

Very good diversification

The 3 months correlation between NIGHTINGALE and Zoom is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding NIGHTINGALE HEALTH EO 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 NIGHTINGALE HEALTH 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 NIGHTINGALE HEALTH EO 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 NIGHTINGALE HEALTH i.e., NIGHTINGALE HEALTH and Zoom Video go up and down completely randomly.

Pair Corralation between NIGHTINGALE HEALTH and Zoom Video

Assuming the 90 days horizon NIGHTINGALE HEALTH EO is expected to under-perform the Zoom Video. In addition to that, NIGHTINGALE HEALTH is 1.36 times more volatile than Zoom Video Communications. It trades about -0.03 of its total potential returns per unit of risk. Zoom Video Communications is currently generating about 0.1 per unit of volatility. If you would invest  6,826  in Zoom Video Communications on October 26, 2024 and sell it today you would earn a total of  819.00  from holding Zoom Video Communications or generate 12.0% return on investment over 90 days.

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

NIGHTINGALE HEALTH EO  vs.  Zoom Video Communications

NIGHTINGALE HEALTH

Risk-Adjusted Performance

0 of 100

Very Weak

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

Zoom Video Communications

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zoom Video Communications are ranked lower than 7 (%) 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 NIGHTINGALE HEALTH and Zoom Video

The main advantage of trading using opposite NIGHTINGALE HEALTH and Zoom Video positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NIGHTINGALE HEALTH 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 NIGHTINGALE HEALTH EO 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.