Correlation Between Altice USA and Verizon Communications

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

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

Diversification Opportunities for Altice USA and Verizon Communications

-0.01

Correlation Coefficient

Altice USA  Verizon Communications

Good diversification

The 3 months correlation between Altice and Verizon is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Altice USA and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications and Altice USA 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 Altice USA are associated (or correlated) with Verizon Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verizon Communications has no effect on the direction of Altice USA i.e., Altice USA and Verizon Communications go up and down completely randomly.

Pair Corralation between Altice USA and Verizon Communications

Given the investment horizon of 90 days Altice USA is expected to generate 2.14 times more return on investment than Verizon Communications. However, Altice USA is 2.14 times more volatile than Verizon Communications. It trades about 0.11 of its potential returns per unit of risk. Verizon Communications is currently generating about 0.17 per unit of risk. If you would invest  234.00  in Altice USA on December 28, 2024 and sell it today you would earn a total of  47.00  from holding Altice USA or generate 20.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Altice USA  vs.  Verizon Communications

Altice USA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Altice USA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Altice USA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Verizon Communications

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Verizon Communications are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Verizon Communications showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Altice USA and Verizon Communications

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

The idea behind Altice USA and Verizon Communications 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.