Correlation Between Zoom Video and Walmart

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

Diversification Opportunities for Zoom Video and Walmart

0.69

Correlation Coefficient

Zoom Video  Walmart

Poor diversification

The 3 months correlation between Zoom and Walmart is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart 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 Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart has no effect on the direction of Zoom Video i.e., Zoom Video and Walmart go up and down completely randomly.

Pair Corralation between Zoom Video and Walmart

Assuming the 90 days trading horizon Zoom Video Communications is expected to under-perform the Walmart. In addition to that, Zoom Video is 1.34 times more volatile than Walmart. It trades about -0.1 of its total potential returns per unit of risk. Walmart is currently generating about -0.13 per unit of volatility. If you would invest  3,578  in Walmart on December 24, 2024 and sell it today you would lose (513.00) from holding Walmart or give up 14.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Zoom Video Communications  vs.  Walmart

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. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Walmart

Risk-Adjusted Performance

Very Weak

Over the last 90 days Walmart has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Zoom Video and Walmart

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

The idea behind Zoom Video Communications and Walmart 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.

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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.