Correlation Between Verizon Communications and Orange SA
Can any of the company-specific risk be diversified away by investing in both Verizon Communications and Orange SA 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 Orange SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and Orange SA ADR, you can compare the effects of market volatilities on Verizon Communications and Orange SA 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 Orange SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verizon Communications and Orange SA.
Diversification Opportunities for Verizon Communications and Orange SA
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Verizon and Orange is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and Orange SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orange SA ADR 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 Orange SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orange SA ADR has no effect on the direction of Verizon Communications i.e., Verizon Communications and Orange SA go up and down completely randomly.
Pair Corralation between Verizon Communications and Orange SA
Allowing for the 90-day total investment horizon Verizon Communications is expected to generate 1.28 times more return on investment than Orange SA. However, Verizon Communications is 1.28 times more volatile than Orange SA ADR. It trades about 0.06 of its potential returns per unit of risk. Orange SA ADR is currently generating about -0.13 per unit of risk. If you would invest 4,058 in Verizon Communications on August 23, 2024 and sell it today you would earn a total of 192.00 from holding Verizon Communications or generate 4.73% 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. Orange SA ADR
Performance |
| Timeline |
| Verizon Communications |
| Orange SA ADR |
Verizon Communications and Orange SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Verizon Communications and Orange SA
The main advantage of trading using opposite Verizon Communications and Orange SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verizon Communications position performs unexpectedly, Orange SA 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 Orange SA will offset losses from the drop in Orange SA's long position.| Verizon Communications vs. T Mobile | Verizon Communications vs. Lumen Technologies | Verizon Communications vs. Comcast Corp | Verizon Communications vs. ATT Inc |
| Orange SA vs. Telefonica Brasil SA | Orange SA vs. Vodafone Group PLC | Orange SA vs. Grupo Televisa SAB | Orange SA vs. America Movil SAB |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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