Correlation Between Box and Zscaler

Can any of the company-specific risk be diversified away by investing in both Box and Zscaler 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 Box and Zscaler into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Box Inc and Zscaler, you can compare the effects of market volatilities on Box and Zscaler 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 Box with a short position of Zscaler. Check out your portfolio center. Please also check ongoing floating volatility patterns of Box and Zscaler.

Diversification Opportunities for Box and Zscaler

-0.26

Correlation Coefficient

Box  Zscaler

Very good diversification

The 3 months correlation between Box and Zscaler is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Box Inc and Zscaler in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zscaler and Box 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 Box Inc are associated (or correlated) with Zscaler. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zscaler has no effect on the direction of Box i.e., Box and Zscaler go up and down completely randomly.

Pair Corralation between Box and Zscaler

Considering the 90-day investment horizon Box Inc is expected to generate 0.61 times more return on investment than Zscaler. However, Box Inc is 1.63 times less risky than Zscaler. It trades about 0.16 of its potential returns per unit of risk. Zscaler is currently generating about -0.01 per unit of risk. If you would invest  3,263  in Box Inc on August 13, 2024 and sell it today you would earn a total of  111.00  from holding Box Inc or generate 3.4% return on investment over 90 days.

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

Box Inc  vs.  Zscaler

Box Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Box Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Box showed solid returns over the last few months and may actually be approaching a breakup point.

Zscaler

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Zscaler are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Zscaler may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Box and Zscaler

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

The idea behind Box Inc and Zscaler 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..