Correlation Between Verizon Communications and HKT Trust
Can any of the company-specific risk be diversified away by investing in both Verizon Communications and HKT Trust 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 HKT Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and HKT Trust and, you can compare the effects of market volatilities on Verizon Communications and HKT Trust 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 HKT Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verizon Communications and HKT Trust.
Diversification Opportunities for Verizon Communications and HKT Trust
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Verizon and HKT is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and HKT Trust and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HKT Trust 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 HKT Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HKT Trust has no effect on the direction of Verizon Communications i.e., Verizon Communications and HKT Trust go up and down completely randomly.
Pair Corralation between Verizon Communications and HKT Trust
Allowing for the 90-day total investment horizon Verizon Communications is expected to generate 0.39 times more return on investment than HKT Trust. However, Verizon Communications is 2.56 times less risky than HKT Trust. It trades about 0.35 of its potential returns per unit of risk. HKT Trust and is currently generating about -0.2 per unit of risk. If you would invest 4,136 in Verizon Communications on September 2, 2024 and sell it today you would earn a total of 298.00 from holding Verizon Communications or generate 7.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verizon Communications vs. HKT Trust and
Performance |
| Timeline |
| Verizon Communications |
| HKT Trust |
Verizon Communications and HKT Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Verizon Communications and HKT Trust
The main advantage of trading using opposite Verizon Communications and HKT Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verizon Communications position performs unexpectedly, HKT Trust 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 HKT Trust will offset losses from the drop in HKT Trust's long position.| Verizon Communications vs. T Mobile | Verizon Communications vs. Comcast Corp | Verizon Communications vs. Lumen Technologies | Verizon Communications vs. Charter Communications |
| HKT Trust vs. ATT Inc | HKT Trust vs. Verizon Communications | HKT Trust vs. Vodafone Group PLC | HKT Trust vs. T Mobile |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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