Correlation Between Verizon Communications and REX FANG
Can any of the company-specific risk be diversified away by investing in both Verizon Communications and REX FANG 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 REX FANG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and REX FANG Innovation, you can compare the effects of market volatilities on Verizon Communications and REX FANG 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 REX FANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verizon Communications and REX FANG.
Diversification Opportunities for Verizon Communications and REX FANG
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Verizon and REX is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and REX FANG Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REX FANG Innovation 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 REX FANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REX FANG Innovation has no effect on the direction of Verizon Communications i.e., Verizon Communications and REX FANG go up and down completely randomly.
Pair Corralation between Verizon Communications and REX FANG
Allowing for the 90-day total investment horizon Verizon Communications is expected to generate 1.04 times more return on investment than REX FANG. However, Verizon Communications is 1.04 times more volatile than REX FANG Innovation. It trades about 0.13 of its potential returns per unit of risk. REX FANG Innovation is currently generating about -0.09 per unit of risk. If you would invest 3,952 in Verizon Communications on December 18, 2024 and sell it today you would earn a total of 471.00 from holding Verizon Communications or generate 11.92% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 98.33% |
Values | Daily Returns |
Verizon Communications vs. REX FANG Innovation
Performance |
Timeline |
Verizon Communications |
REX FANG Innovation |
Verizon Communications and REX FANG Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Verizon Communications and REX FANG
The main advantage of trading using opposite Verizon Communications and REX FANG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verizon Communications position performs unexpectedly, REX FANG 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 REX FANG will offset losses from the drop in REX FANG's long position.Verizon Communications vs. T Mobile | Verizon Communications vs. Lumen Technologies | Verizon Communications vs. Comcast Corp | Verizon Communications vs. ATT Inc |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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