Correlation Between Verizon Communications and SL Green
Can any of the company-specific risk be diversified away by investing in both Verizon Communications and SL Green 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 SL Green into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and SL Green Realty, you can compare the effects of market volatilities on Verizon Communications and SL Green 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 SL Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verizon Communications and SL Green.
Diversification Opportunities for Verizon Communications and SL Green
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Verizon and S1LG34 is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and SL Green Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SL Green Realty 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 SL Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SL Green Realty has no effect on the direction of Verizon Communications i.e., Verizon Communications and SL Green go up and down completely randomly.
Pair Corralation between Verizon Communications and SL Green
Assuming the 90 days trading horizon Verizon Communications is expected to under-perform the SL Green. But the stock apears to be less risky and, when comparing its historical volatility, Verizon Communications is 2.38 times less risky than SL Green. The stock trades about -0.2 of its potential returns per unit of risk. The SL Green Realty is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 20,759 in SL Green Realty on October 24, 2024 and sell it today you would lose (604.00) from holding SL Green Realty or give up 2.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Verizon Communications vs. SL Green Realty
Performance |
| Timeline |
| Verizon Communications |
| SL Green Realty |
Verizon Communications and SL Green Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Verizon Communications and SL Green
The main advantage of trading using opposite Verizon Communications and SL Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verizon Communications position performs unexpectedly, SL Green 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 SL Green will offset losses from the drop in SL Green's long position.| Verizon Communications vs. Capital One Financial | Verizon Communications vs. British American Tobacco | Verizon Communications vs. Elevance Health, | Verizon Communications vs. STMicroelectronics NV |
| SL Green vs. Multilaser Industrial SA | SL Green vs. Cardinal Health, | SL Green vs. United Airlines Holdings | SL Green vs. Molson Coors Beverage |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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