Correlation Between BlackRock and Zoom Video

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

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

Diversification Opportunities for BlackRock and Zoom Video

0.94

Correlation Coefficient

BlackRock  Zoom Video

Almost no diversification

The 3 months correlation between BlackRock and Zoom is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock 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 BlackRock 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 BlackRock 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 BlackRock i.e., BlackRock and Zoom Video go up and down completely randomly.

Pair Corralation between BlackRock and Zoom Video

Assuming the 90 days trading horizon BlackRock is expected to generate 2.9 times less return on investment than Zoom Video. But when comparing it to its historical volatility, BlackRock is 1.07 times less risky than Zoom Video. It trades about 0.02 of its potential returns per unit of risk. Zoom Video Communications is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,013  in Zoom Video Communications on October 4, 2024 and sell it today you would earn a total of  37.00  from holding Zoom Video Communications or generate 1.84% return on investment over 90 days.

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

BlackRock  vs.  Zoom Video Communications

BlackRock

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BlackRock sustained solid returns over the last few months and may actually be approaching a breakup point.

Zoom Video Communications

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Zoom Video Communications are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zoom Video sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BlackRock and Zoom Video

The main advantage of trading using opposite BlackRock and Zoom Video positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock 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 BlackRock 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.