Correlation Between First Mining and Verizon Communications
Can any of the company-specific risk be diversified away by investing in both First Mining 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 First Mining and Verizon Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Mining Gold and Verizon Communications CDR, you can compare the effects of market volatilities on First Mining 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 First Mining with a short position of Verizon Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Mining and Verizon Communications.
Diversification Opportunities for First Mining and Verizon Communications
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Verizon is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding First Mining Gold and Verizon Communications CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications and First Mining 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 First Mining Gold 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 First Mining i.e., First Mining and Verizon Communications go up and down completely randomly.
Pair Corralation between First Mining and Verizon Communications
Assuming the 90 days horizon First Mining Gold is expected to generate 6.9 times more return on investment than Verizon Communications. However, First Mining is 6.9 times more volatile than Verizon Communications CDR. It trades about 0.1 of its potential returns per unit of risk. Verizon Communications CDR is currently generating about 0.01 per unit of risk. If you would invest 0.48 in First Mining Gold on October 25, 2024 and sell it today you would earn a total of 12.52 from holding First Mining Gold or generate 2608.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Mining Gold vs. Verizon Communications CDR
Performance |
| Timeline |
| First Mining Gold |
| Verizon Communications |
First Mining and Verizon Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Mining and Verizon Communications
The main advantage of trading using opposite First Mining and Verizon Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Mining 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.The idea behind First Mining Gold and Verizon Communications CDR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Verizon Communications vs. NeXGold Mining Corp | Verizon Communications vs. Endeavour Silver Corp | Verizon Communications vs. MAG Silver Corp | Verizon Communications vs. T2 Metals Corp |
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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