Correlation Between Zoom Video and Workday

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

Diversification Opportunities for Zoom Video and Workday

0.31

Correlation Coefficient

Zoom Video  Workday

Weak diversification

The 3 months correlation between Zoom and Workday is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and Workday in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Workday 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 Workday. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Workday has no effect on the direction of Zoom Video i.e., Zoom Video and Workday go up and down completely randomly.

Pair Corralation between Zoom Video and Workday

Allowing for the 90-day total investment horizon Zoom Video Communications is expected to under-perform the Workday. In addition to that, Zoom Video is 1.12 times more volatile than Workday. It trades about 0.0 of its total potential returns per unit of risk. Workday is currently generating about 0.06 per unit of volatility. If you would invest  21,841  in Workday on February 1, 2024 and sell it today you would earn a total of  2,632  from holding Workday or generate 12.05% return on investment over 90 days.

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

Zoom Video Communications  vs.  Workday

Zoom Video Communications

Risk-Adjusted Performance

0 of 100

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 very healthy primary indicators, Zoom Video is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Workday

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Workday has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Zoom Video and Workday

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

The idea behind Zoom Video Communications and Workday 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.