Correlation Between Verizon Communications and Magyar Telekom
Can any of the company-specific risk be diversified away by investing in both Verizon Communications and Magyar Telekom 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 Magyar Telekom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and Magyar Telekom Plc, you can compare the effects of market volatilities on Verizon Communications and Magyar Telekom 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 Magyar Telekom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verizon Communications and Magyar Telekom.
Diversification Opportunities for Verizon Communications and Magyar Telekom
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Verizon and Magyar is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and Magyar Telekom Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magyar Telekom Plc 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 Magyar Telekom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magyar Telekom Plc has no effect on the direction of Verizon Communications i.e., Verizon Communications and Magyar Telekom go up and down completely randomly.
Pair Corralation between Verizon Communications and Magyar Telekom
Allowing for the 90-day total investment horizon Verizon Communications is expected to generate 3.16 times less return on investment than Magyar Telekom. But when comparing it to its historical volatility, Verizon Communications is 2.43 times less risky than Magyar Telekom. It trades about 0.14 of its potential returns per unit of risk. Magyar Telekom Plc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,610 in Magyar Telekom Plc on November 7, 2024 and sell it today you would earn a total of 136.00 from holding Magyar Telekom Plc or generate 8.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Verizon Communications vs. Magyar Telekom Plc
Performance |
| Timeline |
| Verizon Communications |
| Magyar Telekom Plc |
Verizon Communications and Magyar Telekom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Verizon Communications and Magyar Telekom
The main advantage of trading using opposite Verizon Communications and Magyar Telekom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verizon Communications position performs unexpectedly, Magyar Telekom 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 Magyar Telekom will offset losses from the drop in Magyar Telekom's long position.| Verizon Communications vs. T Mobile | Verizon Communications vs. Lumen Technologies | Verizon Communications vs. Comcast Corp | Verizon Communications vs. ATT Inc |
| Magyar Telekom vs. SwissCom AG | Magyar Telekom vs. Hellenic Telecommunications Org | Magyar Telekom vs. Telefonica SA ADR | Magyar Telekom vs. Lumen Technologies |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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