Correlation Between AGF Management and Verizon Communications
Can any of the company-specific risk be diversified away by investing in both AGF Management 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 AGF Management and Verizon Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGF Management Limited and Verizon Communications CDR, you can compare the effects of market volatilities on AGF Management 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 AGF Management with a short position of Verizon Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGF Management and Verizon Communications.
Diversification Opportunities for AGF Management and Verizon Communications
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between AGF and Verizon is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding AGF Management Limited and Verizon Communications CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications and AGF Management 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 AGF Management Limited 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 AGF Management i.e., AGF Management and Verizon Communications go up and down completely randomly.
Pair Corralation between AGF Management and Verizon Communications
Assuming the 90 days trading horizon AGF Management Limited is expected to generate 1.61 times more return on investment than Verizon Communications. However, AGF Management is 1.61 times more volatile than Verizon Communications CDR. It trades about 0.19 of its potential returns per unit of risk. Verizon Communications CDR is currently generating about 0.24 per unit of risk. If you would invest 1,042 in AGF Management Limited on September 1, 2024 and sell it today you would earn a total of 78.00 from holding AGF Management Limited or generate 7.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AGF Management Limited vs. Verizon Communications CDR
Performance |
| Timeline |
| AGF Management |
| Verizon Communications |
AGF Management and Verizon Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGF Management and Verizon Communications
The main advantage of trading using opposite AGF Management and Verizon Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGF Management 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.| AGF Management vs. IGM Financial | AGF Management vs. CI Financial Corp | AGF Management vs. iA Financial | AGF Management vs. Transcontinental |
| Verizon Communications vs. Apple Inc CDR | Verizon Communications vs. NVIDIA CDR | Verizon Communications vs. Microsoft Corp CDR | Verizon Communications vs. Amazon CDR |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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