Correlation Between Verizon Communications and AGF Management
Can any of the company-specific risk be diversified away by investing in both Verizon Communications and AGF Management 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 AGF Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications CDR and AGF Management Limited, you can compare the effects of market volatilities on Verizon Communications and AGF Management 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 AGF Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verizon Communications and AGF Management.
Diversification Opportunities for Verizon Communications and AGF Management
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Verizon and AGF is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications CDR and AGF Management Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGF Management 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 CDR are associated (or correlated) with AGF Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGF Management has no effect on the direction of Verizon Communications i.e., Verizon Communications and AGF Management go up and down completely randomly.
Pair Corralation between Verizon Communications and AGF Management
Assuming the 90 days trading horizon Verizon Communications is expected to generate 1.32 times less return on investment than AGF Management. But when comparing it to its historical volatility, Verizon Communications CDR is 1.61 times less risky than AGF Management. It trades about 0.24 of its potential returns per unit of risk. AGF Management Limited is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,042 in AGF Management Limited on September 1, 2024 and sell it today you would earn a total of 78.00 from holding AGF Management Limited or generate 7.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verizon Communications CDR vs. AGF Management Limited
Performance |
| Timeline |
| Verizon Communications |
| AGF Management |
Verizon Communications and AGF Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Verizon Communications and AGF Management
The main advantage of trading using opposite Verizon Communications and AGF Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verizon Communications position performs unexpectedly, AGF Management 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 AGF Management will offset losses from the drop in AGF Management's long position.| Verizon Communications vs. Apple Inc CDR | Verizon Communications vs. NVIDIA CDR | Verizon Communications vs. Microsoft Corp CDR | Verizon Communications vs. Amazon CDR |
| AGF Management vs. IGM Financial | AGF Management vs. CI Financial Corp | AGF Management vs. iA Financial | AGF Management vs. Transcontinental |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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