Correlation Between Alior Bank and Verizon Communications
Can any of the company-specific risk be diversified away by investing in both Alior Bank and Verizon Communications 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 Alior Bank and Verizon Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alior Bank SA and Verizon Communications, you can compare the effects of market volatilities on Alior Bank and Verizon Communications 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 Alior Bank with a short position of Verizon Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alior Bank and Verizon Communications.
Diversification Opportunities for Alior Bank and Verizon Communications
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Alior and Verizon is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Alior Bank SA and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications and Alior Bank 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 Alior Bank SA are associated (or correlated) with Verizon Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verizon Communications has no effect on the direction of Alior Bank i.e., Alior Bank and Verizon Communications go up and down completely randomly.
Pair Corralation between Alior Bank and Verizon Communications
Assuming the 90 days trading horizon Alior Bank is expected to generate 13.41 times less return on investment than Verizon Communications. But when comparing it to its historical volatility, Alior Bank SA is 1.36 times less risky than Verizon Communications. It trades about 0.01 of its potential returns per unit of risk. Verizon Communications is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,480 in Verizon Communications on September 2, 2024 and sell it today you would earn a total of 965.00 from holding Verizon Communications or generate 27.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Alior Bank SA vs. Verizon Communications
Performance |
| Timeline |
| Alior Bank SA |
| Verizon Communications |
Alior Bank and Verizon Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alior Bank and Verizon Communications
The main advantage of trading using opposite Alior Bank and Verizon Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alior Bank position performs unexpectedly, Verizon Communications 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 Verizon Communications will offset losses from the drop in Verizon Communications' long position.| Alior Bank vs. Toyota Motor Corp | Alior Bank vs. SoftBank Group Corp | Alior Bank vs. OTP Bank Nyrt | Alior Bank vs. Las Vegas Sands |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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