Correlation Between Verizon Communications and Schwab Strategic

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

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

Diversification Opportunities for Verizon Communications and Schwab Strategic

0.36

Correlation Coefficient

Verizon Communications  Schwab Strategic

Weak diversification

The 3 months correlation between Verizon and Schwab is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and Schwab Strategic Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab Strategic Trust 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 Schwab Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab Strategic Trust has no effect on the direction of Verizon Communications i.e., Verizon Communications and Schwab Strategic go up and down completely randomly.

Pair Corralation between Verizon Communications and Schwab Strategic

Allowing for the 90-day total investment horizon Verizon Communications is expected to generate 0.73 times more return on investment than Schwab Strategic. However, Verizon Communications is 1.38 times less risky than Schwab Strategic. It trades about 0.52 of its potential returns per unit of risk. Schwab Strategic Trust is currently generating about -0.4 per unit of risk. If you would invest  3,998  in Verizon Communications on December 4, 2024 and sell it today you would earn a total of  352.50  from holding Verizon Communications or generate 8.82% return on investment over 90 days.

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

Verizon Communications  vs.  Schwab Strategic Trust

Verizon Communications

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Verizon Communications are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Schwab Strategic Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Schwab Strategic Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Etf's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

Pair Trading with Verizon Communications and Schwab Strategic

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

The idea behind Verizon Communications and Schwab Strategic Trust 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 Transaction History module to view history of all your transactions and understand their impact on performance.