Correlation Between Verizon Communications and BAKER
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By analyzing existing cross correlation between Verizon Communications and BAKER HUGHES A, you can compare the effects of market volatilities on Verizon Communications and BAKER 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 BAKER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verizon Communications and BAKER.
Diversification Opportunities for Verizon Communications and BAKER
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Verizon and BAKER is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and BAKER HUGHES A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAKER HUGHES A 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 BAKER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAKER HUGHES A has no effect on the direction of Verizon Communications i.e., Verizon Communications and BAKER go up and down completely randomly.
Pair Corralation between Verizon Communications and BAKER
Allowing for the 90-day total investment horizon Verizon Communications is expected to generate 31.5 times less return on investment than BAKER. But when comparing it to its historical volatility, Verizon Communications is 35.12 times less risky than BAKER. It trades about 0.05 of its potential returns per unit of risk. BAKER HUGHES A is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 8,207 in BAKER HUGHES A on August 24, 2024 and sell it today you would lose (182.00) from holding BAKER HUGHES A or give up 2.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 85.08% |
| Values | Daily Returns |
Verizon Communications vs. BAKER HUGHES A
Performance |
| Timeline |
| Verizon Communications |
| BAKER HUGHES A |
Verizon Communications and BAKER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Verizon Communications and BAKER
The main advantage of trading using opposite Verizon Communications and BAKER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verizon Communications position performs unexpectedly, BAKER 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 BAKER will offset losses from the drop in BAKER's long position.| Verizon Communications vs. T Mobile | Verizon Communications vs. Lumen Technologies | Verizon Communications vs. Comcast Corp | Verizon Communications vs. ATT Inc |
| BAKER vs. United Fire Group | BAKER vs. Doubledown Interactive Co | BAKER vs. Old Republic International | BAKER vs. NioCorp Developments Ltd |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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