Correlation Between Verizon Communications and ExGen Resources
Can any of the company-specific risk be diversified away by investing in both Verizon Communications and ExGen Resources 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 ExGen Resources 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 ExGen Resources, you can compare the effects of market volatilities on Verizon Communications and ExGen Resources 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 ExGen Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verizon Communications and ExGen Resources.
Diversification Opportunities for Verizon Communications and ExGen Resources
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Verizon and ExGen is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications CDR and ExGen Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ExGen Resources 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 ExGen Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ExGen Resources has no effect on the direction of Verizon Communications i.e., Verizon Communications and ExGen Resources go up and down completely randomly.
Pair Corralation between Verizon Communications and ExGen Resources
Assuming the 90 days trading horizon Verizon Communications CDR is expected to generate 0.15 times more return on investment than ExGen Resources. However, Verizon Communications CDR is 6.77 times less risky than ExGen Resources. It trades about -0.02 of its potential returns per unit of risk. ExGen Resources is currently generating about -0.11 per unit of risk. If you would invest 1,729 in Verizon Communications CDR on November 3, 2024 and sell it today you would lose (13.00) from holding Verizon Communications CDR or give up 0.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verizon Communications CDR vs. ExGen Resources
Performance |
| Timeline |
| Verizon Communications |
| ExGen Resources |
Verizon Communications and ExGen Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Verizon Communications and ExGen Resources
The main advantage of trading using opposite Verizon Communications and ExGen Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verizon Communications position performs unexpectedly, ExGen Resources 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 ExGen Resources will offset losses from the drop in ExGen Resources' long position.| Verizon Communications vs. Western Investment | Verizon Communications vs. Leveljump Healthcare Corp | Verizon Communications vs. South Pacific Metals | Verizon Communications vs. Brookfield Investments |
| ExGen Resources vs. Mako Mining Corp | ExGen Resources vs. NeXGold Mining Corp | ExGen Resources vs. Metalero Mining Corp | ExGen Resources vs. SalesforceCom CDR |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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