Correlation Between Verizon Communications and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both Verizon Communications and Samsung Electronics 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 Verizon Communications and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and Samsung Electronics Co, you can compare the effects of market volatilities on Verizon Communications and Samsung Electronics 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 Verizon Communications with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verizon Communications and Samsung Electronics.
Diversification Opportunities for Verizon Communications and Samsung Electronics
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Verizon and Samsung is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and Verizon Communications 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 Verizon Communications are associated (or correlated) with Samsung Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Electronics has no effect on the direction of Verizon Communications i.e., Verizon Communications and Samsung Electronics go up and down completely randomly.
Pair Corralation between Verizon Communications and Samsung Electronics
Assuming the 90 days trading horizon Verizon Communications is expected to generate 0.76 times more return on investment than Samsung Electronics. However, Verizon Communications is 1.31 times less risky than Samsung Electronics. It trades about 0.03 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about 0.0 per unit of risk. If you would invest 3,735 in Verizon Communications on August 24, 2024 and sell it today you would earn a total of 565.00 from holding Verizon Communications or generate 15.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verizon Communications vs. Samsung Electronics Co
Performance |
| Timeline |
| Verizon Communications |
| Samsung Electronics |
Verizon Communications and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Verizon Communications and Samsung Electronics
The main advantage of trading using opposite Verizon Communications and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verizon Communications position performs unexpectedly, Samsung Electronics 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 Samsung Electronics will offset losses from the drop in Samsung Electronics' long position.| Verizon Communications vs. Quadrise Plc | Verizon Communications vs. Intuitive Investments Group | Verizon Communications vs. European Metals Holdings | Verizon Communications vs. Athelney Trust plc |
| Samsung Electronics vs. Lundin Mining Corp | Samsung Electronics vs. Odfjell Drilling | Samsung Electronics vs. McEwen Mining | Samsung Electronics vs. Verizon Communications |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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