Correlation Between Verizon Communications and Coeur Mining

Can any of the company-specific risk be diversified away by investing in both Verizon Communications and Coeur Mining 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 Coeur Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Verizon Communications and Coeur Mining, you can compare the effects of market volatilities on Verizon Communications and Coeur Mining 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 Coeur Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verizon Communications and Coeur Mining.

Diversification Opportunities for Verizon Communications and Coeur Mining

0.34

Correlation Coefficient

Verizon Communications  Coeur Mining

Weak diversification

The 3 months correlation between Verizon and Coeur is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and Coeur Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coeur Mining 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 Coeur Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coeur Mining has no effect on the direction of Verizon Communications i.e., Verizon Communications and Coeur Mining go up and down completely randomly.

Pair Corralation between Verizon Communications and Coeur Mining

Assuming the 90 days trading horizon Verizon Communications is expected to generate 2.09 times less return on investment than Coeur Mining. But when comparing it to its historical volatility, Verizon Communications is 3.98 times less risky than Coeur Mining. It trades about 0.15 of its potential returns per unit of risk. Coeur Mining is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  622.00  in Coeur Mining on September 15, 2024 and sell it today you would earn a total of  36.00  from holding Coeur Mining or generate 5.79% 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.  Coeur Mining

Verizon Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Verizon Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Verizon Communications is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Coeur Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coeur Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Coeur Mining is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Verizon Communications and Coeur Mining

The main advantage of trading using opposite Verizon Communications and Coeur Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verizon Communications position performs unexpectedly, Coeur Mining 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 Coeur Mining will offset losses from the drop in Coeur Mining's long position.

The idea behind Verizon Communications and Coeur Mining pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.