Correlation Between Zoom Video and VTEX

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

Diversification Opportunities for Zoom Video and VTEX

-0.63

Correlation Coefficient

Zoom Video  VTEX

Excellent diversification

The 3 months correlation between Zoom and VTEX is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and VTEX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VTEX 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 VTEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VTEX has no effect on the direction of Zoom Video i.e., Zoom Video and VTEX go up and down completely randomly.

Pair Corralation between Zoom Video and VTEX

Allowing for the 90-day total investment horizon Zoom Video Communications is expected to generate 0.89 times more return on investment than VTEX. However, Zoom Video Communications is 1.12 times less risky than VTEX. It trades about 0.12 of its potential returns per unit of risk. VTEX is currently generating about -0.01 per unit of risk. If you would invest  6,173  in Zoom Video Communications on August 31, 2024 and sell it today you would earn a total of  2,096  from holding Zoom Video Communications or generate 33.95% return on investment over 90 days.

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

Zoom Video Communications  vs.  VTEX

Zoom Video Communications

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zoom Video Communications are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Zoom Video displayed solid returns over the last few months and may actually be approaching a breakup point.

VTEX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VTEX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, VTEX is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Zoom Video and VTEX

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

The idea behind Zoom Video Communications and VTEX 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.