Correlation Between MTN Group and Verizon Communications
Can any of the company-specific risk be diversified away by investing in both MTN 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 MTN 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 MTN Group Ltd and Verizon Communications, you can compare the effects of market volatilities on MTN 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 MTN Group with a short position of Verizon Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTN Group and Verizon Communications.
Diversification Opportunities for MTN Group and Verizon Communications
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between MTN and Verizon is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding MTN Group Ltd and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications and MTN 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 MTN Group Ltd 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 MTN Group i.e., MTN Group and Verizon Communications go up and down completely randomly.
Pair Corralation between MTN Group and Verizon Communications
Assuming the 90 days horizon MTN Group Ltd is expected to under-perform the Verizon Communications. In addition to that, MTN Group is 1.69 times more volatile than Verizon Communications. It trades about -0.21 of its total potential returns per unit of risk. Verizon Communications is currently generating about 0.23 per unit of volatility. If you would invest 4,213 in Verizon Communications on September 1, 2024 and sell it today you would earn a total of 221.00 from holding Verizon Communications or generate 5.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
MTN Group Ltd vs. Verizon Communications
Performance |
| Timeline |
| MTN Group |
| Verizon Communications |
MTN Group and Verizon Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MTN Group and Verizon Communications
The main advantage of trading using opposite MTN Group and Verizon Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTN 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.| MTN Group vs. XL Axiata Tbk | MTN Group vs. Telenor ASA ADR | MTN Group vs. KT Corporation | MTN Group vs. Vodacom Group Ltd |
| Verizon Communications vs. T Mobile | Verizon Communications vs. Comcast Corp | Verizon Communications vs. Lumen Technologies | Verizon Communications vs. Charter Communications |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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