Correlation Between Verizon Communications and Annaly Capital
Can any of the company-specific risk be diversified away by investing in both Verizon Communications and Annaly Capital 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 Verizon Communications and Annaly Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and Annaly Capital Management,, you can compare the effects of market volatilities on Verizon Communications and Annaly Capital 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 Verizon Communications with a short position of Annaly Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verizon Communications and Annaly Capital.
Diversification Opportunities for Verizon Communications and Annaly Capital
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Verizon and Annaly is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and Annaly Capital Management, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Annaly Capital Manag and Verizon Communications 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 Verizon Communications are associated (or correlated) with Annaly Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Annaly Capital Manag has no effect on the direction of Verizon Communications i.e., Verizon Communications and Annaly Capital go up and down completely randomly.
Pair Corralation between Verizon Communications and Annaly Capital
Assuming the 90 days trading horizon Verizon Communications is expected to under-perform the Annaly Capital. In addition to that, Verizon Communications is 1.1 times more volatile than Annaly Capital Management,. It trades about -0.22 of its total potential returns per unit of risk. Annaly Capital Management, is currently generating about -0.16 per unit of volatility. If you would invest 11,772 in Annaly Capital Management, on October 11, 2024 and sell it today you would lose (433.00) from holding Annaly Capital Management, or give up 3.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 89.47% |
| Values | Daily Returns |
Verizon Communications vs. Annaly Capital Management,
Performance |
| Timeline |
| Verizon Communications |
| Annaly Capital Manag |
Verizon Communications and Annaly Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Verizon Communications and Annaly Capital
The main advantage of trading using opposite Verizon Communications and Annaly Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verizon Communications position performs unexpectedly, Annaly Capital 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 Annaly Capital will offset losses from the drop in Annaly Capital's long position.| Verizon Communications vs. Tyler Technologies, | Verizon Communications vs. Zebra Technologies | Verizon Communications vs. Micron Technology | Verizon Communications vs. Cognizant Technology Solutions |
| Annaly Capital vs. Verizon Communications | Annaly Capital vs. Unity Software | Annaly Capital vs. T Mobile | Annaly Capital vs. Metalurgica Gerdau SA |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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