Correlation Between Shenandoah Telecommunicatio and Verizon Communications

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

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

Diversification Opportunities for Shenandoah Telecommunicatio and Verizon Communications

0.19

Correlation Coefficient

Shenandoah Telecommunicatio  Verizon Communications

Average diversification

The 3 months correlation between Shenandoah and Verizon is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Shenandoah Telecommunications and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications and Shenandoah Telecommunicatio 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 Shenandoah Telecommunications Co 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 Shenandoah Telecommunicatio i.e., Shenandoah Telecommunicatio and Verizon Communications go up and down completely randomly.

Pair Corralation between Shenandoah Telecommunicatio and Verizon Communications

Given the investment horizon of 90 days Shenandoah Telecommunications Co is expected to under-perform the Verizon Communications. In addition to that, Shenandoah Telecommunicatio is 1.97 times more volatile than Verizon Communications. It trades about -0.03 of its total potential returns per unit of risk. Verizon Communications is currently generating about -0.04 per unit of volatility. If you would invest  4,048  in Verizon Communications on October 9, 2024 and sell it today you would lose (87.00) from holding Verizon Communications or give up 2.15% of portfolio value over 90 days.

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

Shenandoah Telecommunications   vs.  Verizon Communications

Shenandoah Telecommunicatio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shenandoah Telecommunications Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Shenandoah Telecommunicatio is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

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 latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Shenandoah Telecommunicatio and Verizon Communications

The main advantage of trading using opposite Shenandoah Telecommunicatio and Verizon Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenandoah Telecommunicatio 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 Shenandoah Telecommunications Co 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.

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.