Correlation Between Cybin and Verizon Communications

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

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

Diversification Opportunities for Cybin and Verizon Communications

-0.51

Correlation Coefficient

Cybin  Verizon Communications

Excellent diversification

The 3 months correlation between Cybin and Verizon is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Cybin Inc and Verizon Communications CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications and Cybin 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 Cybin Inc are associated (or correlated) with Verizon Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verizon Communications has no effect on the direction of Cybin i.e., Cybin and Verizon Communications go up and down completely randomly.

Pair Corralation between Cybin and Verizon Communications

Assuming the 90 days trading horizon Cybin Inc is expected to generate 4.11 times more return on investment than Verizon Communications. However, Cybin is 4.11 times more volatile than Verizon Communications CDR. It trades about 0.12 of its potential returns per unit of risk. Verizon Communications CDR is currently generating about -0.03 per unit of risk. If you would invest  1,026  in Cybin Inc on September 17, 2024 and sell it today you would earn a total of  368.00  from holding Cybin Inc or generate 35.87% return on investment over 90 days.

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

Cybin Inc  vs.  Verizon Communications CDR

Cybin Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cybin Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Cybin exhibited solid returns over the last few months and may actually be approaching a breakup point.

Verizon Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Verizon Communications CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Verizon Communications is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Cybin and Verizon Communications

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

The idea behind Cybin Inc and Verizon Communications CDR 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.