Correlation Between Lowes Companies and Verizon Communications
Can any of the company-specific risk be diversified away by investing in both Lowes Companies 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 Lowes Companies and Verizon Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lowes Companies and Verizon Communications, you can compare the effects of market volatilities on Lowes Companies 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 Lowes Companies with a short position of Verizon Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lowes Companies and Verizon Communications.
Diversification Opportunities for Lowes Companies and Verizon Communications
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lowes and Verizon is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Lowes Companies and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications and Lowes Companies 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 Lowes Companies 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 Lowes Companies i.e., Lowes Companies and Verizon Communications go up and down completely randomly.
Pair Corralation between Lowes Companies and Verizon Communications
Assuming the 90 days trading horizon Lowes Companies is expected to generate 1.27 times less return on investment than Verizon Communications. In addition to that, Lowes Companies is 1.02 times more volatile than Verizon Communications. It trades about 0.08 of its total potential returns per unit of risk. Verizon Communications is currently generating about 0.1 per unit of volatility. If you would invest 2,535 in Verizon Communications on September 12, 2024 and sell it today you would earn a total of 1,750 from holding Verizon Communications or generate 69.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lowes Companies vs. Verizon Communications
Performance |
| Timeline |
| Lowes Companies |
| Verizon Communications |
Lowes Companies and Verizon Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lowes Companies and Verizon Communications
The main advantage of trading using opposite Lowes Companies and Verizon Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lowes Companies 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.| Lowes Companies vs. Verizon Communications | Lowes Companies vs. salesforce inc | Lowes Companies vs. Raytheon Technologies | Lowes Companies vs. Marvell Technology |
| Verizon Communications vs. T Mobile | Verizon Communications vs. Vodafone Group Public | Verizon Communications vs. Fundo Investimento Imobiliario | Verizon Communications vs. LESTE FDO INV |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |