Correlation Between Zoom Video and Aston Martin

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

Diversification Opportunities for Zoom Video and Aston Martin

-0.59

Correlation Coefficient

Zoom Video  Aston Martin

Excellent diversification

The 3 months correlation between Zoom and Aston is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and Aston Martin Lagonda in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aston Martin Lagonda 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 Aston Martin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aston Martin Lagonda has no effect on the direction of Zoom Video i.e., Zoom Video and Aston Martin go up and down completely randomly.

Pair Corralation between Zoom Video and Aston Martin

Allowing for the 90-day total investment horizon Zoom Video Communications is expected to generate 0.61 times more return on investment than Aston Martin. However, Zoom Video Communications is 1.64 times less risky than Aston Martin. It trades about 0.04 of its potential returns per unit of risk. Aston Martin Lagonda is currently generating about -0.06 per unit of risk. If you would invest  6,714  in Zoom Video Communications on September 1, 2024 and sell it today you would earn a total of  1,555  from holding Zoom Video Communications or generate 23.16% return on investment over 90 days.

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

Zoom Video Communications  vs.  Aston Martin Lagonda

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 unsteady primary indicators, Zoom Video displayed solid returns over the last few months and may actually be approaching a breakup point.

Aston Martin Lagonda

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Zoom Video and Aston Martin

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

The idea behind Zoom Video Communications and Aston Martin Lagonda 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.