Correlation Between NowVertical and Zscaler

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

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

Diversification Opportunities for NowVertical and Zscaler

0.58

Correlation Coefficient

NowVertical  Zscaler

Very weak diversification

The 3 months correlation between NowVertical and Zscaler is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding NowVertical Group and Zscaler in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zscaler and NowVertical 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 NowVertical Group are associated (or correlated) with Zscaler. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zscaler has no effect on the direction of NowVertical i.e., NowVertical and Zscaler go up and down completely randomly.

Pair Corralation between NowVertical and Zscaler

Assuming the 90 days horizon NowVertical Group is expected to generate 6.21 times more return on investment than Zscaler. However, NowVertical is 6.21 times more volatile than Zscaler. It trades about 0.13 of its potential returns per unit of risk. Zscaler is currently generating about 0.16 per unit of risk. If you would invest  12.00  in NowVertical Group on September 13, 2024 and sell it today you would earn a total of  12.00  from holding NowVertical Group or generate 100.0% return on investment over 90 days.

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

NowVertical Group  vs.  Zscaler

NowVertical Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NowVertical Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, NowVertical reported solid returns over the last few months and may actually be approaching a breakup point.

Zscaler

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zscaler are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Zscaler unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NowVertical and Zscaler

The main advantage of trading using opposite NowVertical and Zscaler positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NowVertical position performs unexpectedly, Zscaler 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 Zscaler will offset losses from the drop in Zscaler's long position.

The idea behind NowVertical Group and Zscaler 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.