Correlation Between Global X and Verizon Communications
Can any of the company-specific risk be diversified away by investing in both Global X 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 Global X and Verizon Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Funds and Verizon Communications, you can compare the effects of market volatilities on Global X 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 Global X with a short position of Verizon Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Verizon Communications.
Diversification Opportunities for Global X and Verizon Communications
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Global and Verizon is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications and Global X 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 Global X Funds 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 Global X i.e., Global X and Verizon Communications go up and down completely randomly.
Pair Corralation between Global X and Verizon Communications
Assuming the 90 days trading horizon Global X is expected to generate 1.22 times less return on investment than Verizon Communications. But when comparing it to its historical volatility, Global X Funds is 1.01 times less risky than Verizon Communications. It trades about 0.11 of its potential returns per unit of risk. Verizon Communications is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 3,500 in Verizon Communications on September 1, 2024 and sell it today you would earn a total of 919.00 from holding Verizon Communications or generate 26.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Funds vs. Verizon Communications
Performance |
| Timeline |
| Global X Funds |
| Verizon Communications |
Global X and Verizon Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Verizon Communications
The main advantage of trading using opposite Global X and Verizon Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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.| Global X vs. Taiwan Semiconductor Manufacturing | Global X vs. Alibaba Group Holding | Global X vs. Microsoft | Global X vs. Alphabet |
| Verizon Communications vs. Lupatech SA | Verizon Communications vs. Rossi Residencial SA | Verizon Communications vs. Usinas Siderrgicas de | Verizon Communications vs. Refinaria de Petrleos |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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