Correlation Between VF and EMBARQ

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

By analyzing existing cross correlation between VF Corporation and EMBARQ P 7995, you can compare the effects of market volatilities on VF and EMBARQ 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 VF with a short position of EMBARQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of VF and EMBARQ.

Diversification Opportunities for VF and EMBARQ

0.37

Correlation Coefficient

VF  EMBARQ

Weak diversification

The 3 months correlation between VF and EMBARQ is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding VF Corp. and EMBARQ P 7995 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMBARQ P 7995 and VF 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 VF Corporation are associated (or correlated) with EMBARQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMBARQ P 7995 has no effect on the direction of VF i.e., VF and EMBARQ go up and down completely randomly.

Pair Corralation between VF and EMBARQ

Considering the 90-day investment horizon VF Corporation is expected to under-perform the EMBARQ. In addition to that, VF is 1.04 times more volatile than EMBARQ P 7995. It trades about -0.13 of its total potential returns per unit of risk. EMBARQ P 7995 is currently generating about -0.09 per unit of volatility. If you would invest  5,311  in EMBARQ P 7995 on December 22, 2024 and sell it today you would lose (1,017) from holding EMBARQ P 7995 or give up 19.15% of portfolio value over 90 days.

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

VF Corp.  vs.  EMBARQ P 7995

VF Corporation

Risk-Adjusted Performance

Very Weak

Over the last 90 days VF Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

EMBARQ P 7995

Risk-Adjusted Performance

Very Weak

Over the last 90 days EMBARQ P 7995 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for EMBARQ P 7995 investors.

Pair Trading with VF and EMBARQ

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

The idea behind VF Corporation and EMBARQ P 7995 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.