Correlation Between Verizon Communications and Canaf Investments
Can any of the company-specific risk be diversified away by investing in both Verizon Communications and Canaf Investments 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 Canaf Investments 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 Canaf Investments, you can compare the effects of market volatilities on Verizon Communications and Canaf Investments 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 Canaf Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verizon Communications and Canaf Investments.
Diversification Opportunities for Verizon Communications and Canaf Investments
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Verizon and Canaf is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications CDR and Canaf Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canaf Investments 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 Canaf Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canaf Investments has no effect on the direction of Verizon Communications i.e., Verizon Communications and Canaf Investments go up and down completely randomly.
Pair Corralation between Verizon Communications and Canaf Investments
Assuming the 90 days trading horizon Verizon Communications CDR is expected to under-perform the Canaf Investments. But the stock apears to be less risky and, when comparing its historical volatility, Verizon Communications CDR is 2.88 times less risky than Canaf Investments. The stock trades about -0.44 of its potential returns per unit of risk. The Canaf Investments is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 30.00 in Canaf Investments on October 10, 2024 and sell it today you would earn a total of 3.00 from holding Canaf Investments or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verizon Communications CDR vs. Canaf Investments
Performance |
| Timeline |
| Verizon Communications |
| Canaf Investments |
Verizon Communications and Canaf Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Verizon Communications and Canaf Investments
The main advantage of trading using opposite Verizon Communications and Canaf Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verizon Communications position performs unexpectedly, Canaf Investments 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 Canaf Investments will offset losses from the drop in Canaf Investments' long position.| Verizon Communications vs. Magna Mining | Verizon Communications vs. Western Investment | Verizon Communications vs. Westshore Terminals Investment | Verizon Communications vs. Partners Value Investments |
| Canaf Investments vs. High Liner Foods | Canaf Investments vs. Millbank Mining Corp | Canaf Investments vs. Mako Mining Corp | Canaf Investments vs. First National Financial |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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