Correlation Between Verizon Communications and Innovator Growth

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

By analyzing existing cross correlation between Verizon Communications and Innovator Growth 100 Accelerated, you can compare the effects of market volatilities on Verizon Communications and Innovator Growth 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 Innovator Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verizon Communications and Innovator Growth.

Diversification Opportunities for Verizon Communications and Innovator Growth

-0.45

Correlation Coefficient

Verizon Communications  Innovator Growth

Very good diversification

The 3 months correlation between Verizon and Innovator is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and Innovator Growth 100 Accelerat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Growth 100 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 Innovator Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Growth 100 has no effect on the direction of Verizon Communications i.e., Verizon Communications and Innovator Growth go up and down completely randomly.

Pair Corralation between Verizon Communications and Innovator Growth

Allowing for the 90-day total investment horizon Verizon Communications is expected to generate 1.1 times more return on investment than Innovator Growth. However, Verizon Communications is 1.1 times more volatile than Innovator Growth 100 Accelerated. It trades about 0.16 of its potential returns per unit of risk. Innovator Growth 100 Accelerated is currently generating about -0.09 per unit of risk. If you would invest  3,889  in Verizon Communications on December 28, 2024 and sell it today you would earn a total of  604.00  from holding Verizon Communications or generate 15.53% return on investment over 90 days.

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

Verizon Communications  vs.  Innovator Growth 100 Accelerat

Verizon Communications

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Verizon Communications are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Verizon Communications showed solid returns over the last few months and may actually be approaching a breakup point.

Innovator Growth 100

Risk-Adjusted Performance

Very Weak

Over the last 90 days Innovator Growth 100 Accelerated has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Etf's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

Pair Trading with Verizon Communications and Innovator Growth

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

The idea behind Verizon Communications and Innovator Growth 100 Accelerated 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.