Correlation Between Zoom Video and Wix

Can any of the company-specific risk be diversified away by investing in both Zoom Video and Wix 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 Wix 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 Wix, you can compare the effects of market volatilities on Zoom Video and Wix 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 Wix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoom Video and Wix.

Diversification Opportunities for Zoom Video and Wix

0.4

Correlation Coefficient

Zoom Video  Wix

Very weak diversification

The 3 months correlation between Zoom and Wix is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and Wix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wix 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 Wix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wix has no effect on the direction of Zoom Video i.e., Zoom Video and Wix go up and down completely randomly.

Pair Corralation between Zoom Video and Wix

If you would invest (100.00) in Wix on October 10, 2024 and sell it today you would earn a total of  100.00  from holding Wix or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	0.0%
Values	Daily Returns

Zoom Video Communications  vs.  Wix

Zoom Video Communications

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zoom Video Communications are ranked lower than 12 (%) 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.

Wix

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Wix has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak forward indicators, Wix sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zoom Video and Wix

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

The idea behind Zoom Video Communications and Wix 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.