Correlation Between Verizon Communications and Katipult Technology

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

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

Diversification Opportunities for Verizon Communications and Katipult Technology

-0.14

Correlation Coefficient

Verizon Communications  Katipult Technology

Good diversification

The 3 months correlation between Verizon and Katipult is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications CDR and Katipult Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Katipult Technology Corp 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 CDR are associated (or correlated) with Katipult Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Katipult Technology Corp has no effect on the direction of Verizon Communications i.e., Verizon Communications and Katipult Technology go up and down completely randomly.

Pair Corralation between Verizon Communications and Katipult Technology

Assuming the 90 days trading horizon Verizon Communications is expected to generate 5.69 times less return on investment than Katipult Technology. But when comparing it to its historical volatility, Verizon Communications CDR is 10.3 times less risky than Katipult Technology. It trades about 0.14 of its potential returns per unit of risk. Katipult Technology Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1.00  in Katipult Technology Corp on December 28, 2024 and sell it today you would earn a total of  0.00  from holding Katipult Technology Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Verizon Communications CDR  vs.  Katipult Technology Corp

Verizon Communications

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Verizon Communications CDR are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Verizon Communications displayed solid returns over the last few months and may actually be approaching a breakup point.

Katipult Technology Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Katipult Technology Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Katipult Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Verizon Communications and Katipult Technology

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

The idea behind Verizon Communications CDR and Katipult Technology Corp 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.