Correlation Between Life360, Common and Zoom Video

Can any of the company-specific risk be diversified away by investing in both Life360, Common 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 Life360, Common and Zoom Video into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Life360, Common Stock and Zoom Video Communications, you can compare the effects of market volatilities on Life360, Common 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 Life360, Common with a short position of Zoom Video. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life360, Common and Zoom Video.

Diversification Opportunities for Life360, Common and Zoom Video

0.11

Correlation Coefficient

Life360, Common  Zoom Video

Average diversification

The 3 months correlation between Life360, and Zoom is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Life360, Common Stock 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 Life360, Common 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 Life360, Common Stock 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 Life360, Common i.e., Life360, Common and Zoom Video go up and down completely randomly.

Pair Corralation between Life360, Common and Zoom Video

Considering the 90-day investment horizon Life360, Common Stock is expected to generate 2.25 times more return on investment than Zoom Video. However, Life360, Common is 2.25 times more volatile than Zoom Video Communications. It trades about 0.21 of its potential returns per unit of risk. Zoom Video Communications is currently generating about -0.39 per unit of risk. If you would invest  4,213  in Life360, Common Stock on October 25, 2024 and sell it today you would earn a total of  399.00  from holding Life360, Common Stock or generate 9.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Life360, Common Stock  vs.  Zoom Video Communications

Life360, Common Stock

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Life360, Common Stock are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating forward indicators, Life360, Common may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Zoom Video Communications

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zoom Video Communications are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent primary indicators, Zoom Video may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Life360, Common and Zoom Video

The main advantage of trading using opposite Life360, Common and Zoom Video positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life360, Common 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 Life360, Common Stock 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.