Correlation Between Zoom Video and Marin Software

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

Diversification Opportunities for Zoom Video and Marin Software

-0.08

Correlation Coefficient

Zoom Video  Marin Software

Good diversification

The 3 months correlation between Zoom and Marin is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and Marin Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marin Software 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 Marin Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marin Software has no effect on the direction of Zoom Video i.e., Zoom Video and Marin Software go up and down completely randomly.

Pair Corralation between Zoom Video and Marin Software

Allowing for the 90-day total investment horizon Zoom Video Communications is expected to generate 0.8 times more return on investment than Marin Software. However, Zoom Video Communications is 1.25 times less risky than Marin Software. It trades about 0.01 of its potential returns per unit of risk. Marin Software is currently generating about -0.02 per unit of risk. If you would invest  7,385  in Zoom Video Communications on November 27, 2024 and sell it today you would earn a total of  37.00  from holding Zoom Video Communications or generate 0.5% return on investment over 90 days.

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

Zoom Video Communications  vs.  Marin Software

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. In spite of inconsistent performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Marin Software

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marin Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Zoom Video and Marin Software

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

The idea behind Zoom Video Communications and Marin Software 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.