Correlation Between Zoom Video and Bt Brands

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

Diversification Opportunities for Zoom Video and Bt Brands

-0.38

Correlation Coefficient

Zoom Video  Bt Brands

Very good diversification

The 3 months correlation between Zoom and BTBD is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and Bt Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bt Brands 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 Bt Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bt Brands has no effect on the direction of Zoom Video i.e., Zoom Video and Bt Brands go up and down completely randomly.

Pair Corralation between Zoom Video and Bt Brands

Allowing for the 90-day total investment horizon Zoom Video is expected to generate 2.26 times less return on investment than Bt Brands. But when comparing it to its historical volatility, Zoom Video Communications is 2.67 times less risky than Bt Brands. It trades about 0.03 of its potential returns per unit of risk. Bt Brands is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  180.00  in Bt Brands on September 19, 2024 and sell it today you would lose (21.00) from holding Bt Brands or give up 11.67% of portfolio value over 90 days.

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

Zoom Video Communications  vs.  Bt Brands

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. In spite of very abnormal primary indicators, Zoom Video displayed solid returns over the last few months and may actually be approaching a breakup point.

Bt Brands

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bt Brands are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Bt Brands is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Zoom Video and Bt Brands

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

The idea behind Zoom Video Communications and Bt Brands 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.