Correlation Between Verizon Communications and ProShares Short
Can any of the company-specific risk be diversified away by investing in both Verizon Communications and ProShares Short 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 ProShares Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and ProShares Short MidCap400, you can compare the effects of market volatilities on Verizon Communications and ProShares Short 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 ProShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verizon Communications and ProShares Short.
Diversification Opportunities for Verizon Communications and ProShares Short
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Verizon and ProShares is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and ProShares Short MidCap400 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short MidCap400 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 ProShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Short MidCap400 has no effect on the direction of Verizon Communications i.e., Verizon Communications and ProShares Short go up and down completely randomly.
Pair Corralation between Verizon Communications and ProShares Short
Allowing for the 90-day total investment horizon Verizon Communications is expected to generate 1.37 times more return on investment than ProShares Short. However, Verizon Communications is 1.37 times more volatile than ProShares Short MidCap400. It trades about 0.06 of its potential returns per unit of risk. ProShares Short MidCap400 is currently generating about -0.02 per unit of risk. If you would invest 3,261 in Verizon Communications on December 9, 2024 and sell it today you would earn a total of 1,345 from holding Verizon Communications or generate 41.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verizon Communications vs. ProShares Short MidCap400
Performance |
| Timeline |
| Verizon Communications |
| ProShares Short MidCap400 |
Verizon Communications and ProShares Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Verizon Communications and ProShares Short
The main advantage of trading using opposite Verizon Communications and ProShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verizon Communications position performs unexpectedly, ProShares Short 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 ProShares Short will offset losses from the drop in ProShares Short's long position.| Verizon Communications vs. T Mobile | ||
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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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