Correlation Between Verizon Communications and 694308JU2

Can any of the company-specific risk be diversified away by investing in both Verizon Communications and 694308JU2 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 694308JU2 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Verizon Communications and PCG 42 01 JUN 41, you can compare the effects of market volatilities on Verizon Communications and 694308JU2 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 694308JU2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verizon Communications and 694308JU2.

Diversification Opportunities for Verizon Communications and 694308JU2

-0.34

Correlation Coefficient

Verizon Communications  694308JU2

Very good diversification

The 3 months correlation between Verizon and 694308JU2 is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and PCG 42 01 JUN 41 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCG 42 01 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 694308JU2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PCG 42 01 has no effect on the direction of Verizon Communications i.e., Verizon Communications and 694308JU2 go up and down completely randomly.

Pair Corralation between Verizon Communications and 694308JU2

Allowing for the 90-day total investment horizon Verizon Communications is expected to generate 0.71 times more return on investment than 694308JU2. However, Verizon Communications is 1.41 times less risky than 694308JU2. It trades about 0.12 of its potential returns per unit of risk. PCG 42 01 JUN 41 is currently generating about -0.18 per unit of risk. If you would invest  3,924  in Verizon Communications on December 25, 2024 and sell it today you would earn a total of  432.00  from holding Verizon Communications or generate 11.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	79.66%
Values	Daily Returns

Verizon Communications  vs.  PCG 42 01 JUN 41

Verizon Communications

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Verizon Communications are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Verizon Communications may actually be approaching a critical reversion point that can send shares even higher in April 2025.

PCG 42 01

Risk-Adjusted Performance

Very Weak

Over the last 90 days PCG 42 01 JUN 41 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for PCG 42 01 JUN 41 investors.

Pair Trading with Verizon Communications and 694308JU2

The main advantage of trading using opposite Verizon Communications and 694308JU2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verizon Communications position performs unexpectedly, 694308JU2 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 694308JU2 will offset losses from the drop in 694308JU2's long position.

The idea behind Verizon Communications and PCG 42 01 JUN 41 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.