Correlation Between Zoom Video and BlackRock

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

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

Diversification Opportunities for Zoom Video and BlackRock

0.89

Correlation Coefficient

Zoom Video  BlackRock

Very poor diversification

The 3 months correlation between Zoom and BlackRock is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and BlackRock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock and Zoom Video 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 Zoom Video Communications are associated (or correlated) with BlackRock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock has no effect on the direction of Zoom Video i.e., Zoom Video and BlackRock go up and down completely randomly.

Pair Corralation between Zoom Video and BlackRock

Assuming the 90 days trading horizon Zoom Video Communications is expected to under-perform the BlackRock. But the stock apears to be less risky and, when comparing its historical volatility, Zoom Video Communications is 1.56 times less risky than BlackRock. The stock trades about -0.43 of its potential returns per unit of risk. The BlackRock is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  9,747  in BlackRock on October 22, 2024 and sell it today you would lose (471.00) from holding BlackRock or give up 4.83% of portfolio value over 90 days.

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

Zoom Video Communications  vs.  BlackRock

Zoom Video Communications

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zoom Video Communications are ranked lower than 8 (%) 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.

BlackRock

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with Zoom Video and BlackRock

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

The idea behind Zoom Video Communications and BlackRock 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.