Correlation Between Zoom Video and Nextplat Corp

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

Diversification Opportunities for Zoom Video and Nextplat Corp

-0.23

Correlation Coefficient

Zoom Video  Nextplat Corp

Very good diversification

The 3 months correlation between Zoom and Nextplat is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and Nextplat Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextplat Corp 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 Nextplat Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextplat Corp has no effect on the direction of Zoom Video i.e., Zoom Video and Nextplat Corp go up and down completely randomly.

Pair Corralation between Zoom Video and Nextplat Corp

Allowing for the 90-day total investment horizon Zoom Video is expected to generate 1.92 times less return on investment than Nextplat Corp. But when comparing it to its historical volatility, Zoom Video Communications is 2.94 times less risky than Nextplat Corp. It trades about 0.02 of its potential returns per unit of risk. Nextplat Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  156.00  in Nextplat Corp on November 19, 2024 and sell it today you would lose (50.00) from holding Nextplat Corp or give up 32.05% 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.  Nextplat Corp

Zoom Video Communications

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zoom Video Communications are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent primary indicators, Zoom Video may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Nextplat Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nextplat Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Nextplat Corp disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zoom Video and Nextplat Corp

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

The idea behind Zoom Video Communications and Nextplat Corp 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.