Correlation Between Verizon Communications and Xp
Can any of the company-specific risk be diversified away by investing in both Verizon Communications and Xp 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 Xp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and Xp Inc, you can compare the effects of market volatilities on Verizon Communications and Xp 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 Xp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verizon Communications and Xp.
Diversification Opportunities for Verizon Communications and Xp
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Verizon and Xp is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and Xp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xp Inc 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 Xp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xp Inc has no effect on the direction of Verizon Communications i.e., Verizon Communications and Xp go up and down completely randomly.
Pair Corralation between Verizon Communications and Xp
Assuming the 90 days trading horizon Verizon Communications is expected to generate 0.59 times more return on investment than Xp. However, Verizon Communications is 1.69 times less risky than Xp. It trades about 0.05 of its potential returns per unit of risk. Xp Inc is currently generating about 0.01 per unit of risk. If you would invest 3,262 in Verizon Communications on September 3, 2024 and sell it today you would earn a total of 1,157 from holding Verizon Communications or generate 35.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.16% |
| Values | Daily Returns |
Verizon Communications vs. Xp Inc
Performance |
| Timeline |
| Verizon Communications |
| Xp Inc |
Verizon Communications and Xp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Verizon Communications and Xp
The main advantage of trading using opposite Verizon Communications and Xp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verizon Communications position performs unexpectedly, Xp 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 Xp will offset losses from the drop in Xp's long position.| Verizon Communications vs. T Mobile | Verizon Communications vs. Telefnica Brasil SA | Verizon Communications vs. TIM SA | Verizon Communications vs. Oi SA |
| Xp vs. Metalurgica Gerdau SA | Xp vs. Healthpeak Properties | Xp vs. Extra Space Storage | Xp 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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