Correlation Between Zoom Video and Strategic Education

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

Diversification Opportunities for Zoom Video and Strategic Education

0.74

Correlation Coefficient

Zoom Video  Strategic Education

Poor diversification

The 3 months correlation between Zoom and Strategic is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and Strategic Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Education 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 Strategic Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Education has no effect on the direction of Zoom Video i.e., Zoom Video and Strategic Education go up and down completely randomly.

Pair Corralation between Zoom Video and Strategic Education

Assuming the 90 days trading horizon Zoom Video Communications is expected to generate 0.61 times more return on investment than Strategic Education. However, Zoom Video Communications is 1.64 times less risky than Strategic Education. It trades about -0.2 of its potential returns per unit of risk. Strategic Education is currently generating about -0.22 per unit of risk. If you would invest  6,981  in Zoom Video Communications on March 30, 2025 and sell it today you would lose (319.00) from holding Zoom Video Communications or give up 4.57% of portfolio value over 90 days.

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

Zoom Video Communications  vs.  Strategic Education

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 comparatively stable basic indicators, Zoom Video is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Strategic Education

Risk-Adjusted Performance

Very Weak

Over the last 90 days Strategic Education has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Strategic Education is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Zoom Video and Strategic Education

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

The idea behind Zoom Video Communications and Strategic Education 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.