Correlation Between CATLIN GROUP and Verizon Communications
Can any of the company-specific risk be diversified away by investing in both CATLIN GROUP 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 CATLIN GROUP and Verizon Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CATLIN GROUP and Verizon Communications, you can compare the effects of market volatilities on CATLIN GROUP 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 CATLIN GROUP with a short position of Verizon Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of CATLIN GROUP and Verizon Communications.
Diversification Opportunities for CATLIN GROUP and Verizon Communications
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CATLIN and Verizon is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding CATLIN GROUP and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications and CATLIN GROUP 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 CATLIN GROUP 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 CATLIN GROUP i.e., CATLIN GROUP and Verizon Communications go up and down completely randomly.
Pair Corralation between CATLIN GROUP and Verizon Communications
Assuming the 90 days trading horizon CATLIN GROUP is expected to under-perform the Verizon Communications. But the stock apears to be less risky and, when comparing its historical volatility, CATLIN GROUP is 1.9 times less risky than Verizon Communications. The stock trades about -0.35 of its potential returns per unit of risk. The Verizon Communications is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 3,953 in Verizon Communications on October 29, 2024 and sell it today you would earn a total of 2.00 from holding Verizon Communications or generate 0.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CATLIN GROUP vs. Verizon Communications
Performance |
| Timeline |
| CATLIN GROUP |
| Verizon Communications |
CATLIN GROUP and Verizon Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CATLIN GROUP and Verizon Communications
The main advantage of trading using opposite CATLIN GROUP and Verizon Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CATLIN GROUP 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.| CATLIN GROUP vs. CVR Energy | CATLIN GROUP vs. Viridian Therapeutics | CATLIN GROUP vs. Nationwide Building Society | CATLIN GROUP vs. Digital Realty Trust |
| Verizon Communications vs. Tatton Asset Management | Verizon Communications vs. Games Workshop Group | Verizon Communications vs. Waste Management | Verizon Communications vs. Jupiter Fund Management |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |