Correlation Between Verizon Communications and FingerMotion

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

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

Diversification Opportunities for Verizon Communications and FingerMotion

0.7

Correlation Coefficient

Verizon Communications  FingerMotion

Poor diversification

The 3 months correlation between Verizon and FingerMotion is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and FingerMotion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FingerMotion 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 FingerMotion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FingerMotion has no effect on the direction of Verizon Communications i.e., Verizon Communications and FingerMotion go up and down completely randomly.

Pair Corralation between Verizon Communications and FingerMotion

Allowing for the 90-day total investment horizon Verizon Communications is expected to generate 0.11 times more return on investment than FingerMotion. However, Verizon Communications is 8.92 times less risky than FingerMotion. It trades about -0.26 of its potential returns per unit of risk. FingerMotion is currently generating about -0.06 per unit of risk. If you would invest  4,319  in Verizon Communications on October 26, 2024 and sell it today you would lose (401.00) from holding Verizon Communications or give up 9.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.5%
Values	Daily Returns

Verizon Communications  vs.  FingerMotion

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 fairly strong basic indicators, Verizon Communications is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

FingerMotion

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FingerMotion has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Verizon Communications and FingerMotion

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

The idea behind Verizon Communications and FingerMotion 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.