Correlation Between Ecofin Global and Zoom Video

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

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

Diversification Opportunities for Ecofin Global and Zoom Video

-0.33

Correlation Coefficient

Ecofin Global  Zoom Video

Very good diversification

The 3 months correlation between Ecofin and Zoom is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Ecofin Global Utilities 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 Ecofin Global 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 Ecofin Global Utilities 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 Ecofin Global i.e., Ecofin Global and Zoom Video go up and down completely randomly.

Pair Corralation between Ecofin Global and Zoom Video

Assuming the 90 days trading horizon Ecofin Global Utilities is expected to generate 0.7 times more return on investment than Zoom Video. However, Ecofin Global Utilities is 1.42 times less risky than Zoom Video. It trades about 0.11 of its potential returns per unit of risk. Zoom Video Communications is currently generating about 0.0 per unit of risk. If you would invest  17,844  in Ecofin Global Utilities on December 30, 2024 and sell it today you would earn a total of  1,456  from holding Ecofin Global Utilities or generate 8.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	63.08%
Values	Daily Returns

Ecofin Global Utilities  vs.  Zoom Video Communications

Ecofin Global Utilities

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ecofin Global Utilities are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Ecofin Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 comparatively stable basic indicators, Zoom Video is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ecofin Global and Zoom Video

The main advantage of trading using opposite Ecofin Global and Zoom Video positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecofin Global 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 Ecofin Global Utilities 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.