Correlation Between Verizon Communications and Fortune Bay

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

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

Diversification Opportunities for Verizon Communications and Fortune Bay

0.43

Correlation Coefficient

Verizon Communications  Fortune Bay

Very weak diversification

The 3 months correlation between Verizon and Fortune is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and Fortune Bay Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Bay 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 are associated (or correlated) with Fortune Bay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Bay Corp has no effect on the direction of Verizon Communications i.e., Verizon Communications and Fortune Bay go up and down completely randomly.

Pair Corralation between Verizon Communications and Fortune Bay

Allowing for the 90-day total investment horizon Verizon Communications is expected to generate 2.42 times less return on investment than Fortune Bay. But when comparing it to its historical volatility, Verizon Communications is 6.63 times less risky than Fortune Bay. It trades about 0.54 of its potential returns per unit of risk. Fortune Bay Corp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  18.00  in Fortune Bay Corp on December 2, 2024 and sell it today you would earn a total of  4.00  from holding Fortune Bay Corp or generate 22.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Verizon Communications  vs.  Fortune Bay Corp

Verizon Communications

Risk-Adjusted Performance

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.

Fortune Bay Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fortune Bay Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Fortune Bay reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Verizon Communications and Fortune Bay

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

The idea behind Verizon Communications and Fortune Bay 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.