Correlation Between Albertsons Companies and Zoom Video

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

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

Diversification Opportunities for Albertsons Companies and Zoom Video

0.8

Correlation Coefficient

Albertsons Companies  Zoom Video

Very poor diversification

The 3 months correlation between Albertsons and Zoom is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Albertsons Companies 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 Albertsons Companies 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 Albertsons Companies 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 Albertsons Companies i.e., Albertsons Companies and Zoom Video go up and down completely randomly.

Pair Corralation between Albertsons Companies and Zoom Video

Considering the 90-day investment horizon Albertsons Companies is expected to generate 23.03 times less return on investment than Zoom Video. But when comparing it to its historical volatility, Albertsons Companies is 1.55 times less risky than Zoom Video. It trades about 0.01 of its potential returns per unit of risk. Zoom Video Communications is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  5,754  in Zoom Video Communications on September 24, 2024 and sell it today you would earn a total of  2,806  from holding Zoom Video Communications or generate 48.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.21%
Values	Daily Returns

Albertsons Companies  vs.  Zoom Video Communications

Albertsons Companies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Albertsons Companies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain fundamental indicators, Albertsons Companies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 very fragile primary indicators, Zoom Video displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Albertsons Companies and Zoom Video

The main advantage of trading using opposite Albertsons Companies and Zoom Video positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Albertsons Companies 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 Albertsons Companies 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.