Correlation Between Verizon Communications and Galore Resources

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

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

Diversification Opportunities for Verizon Communications and Galore Resources

0.25

Correlation Coefficient

Verizon Communications  Galore Resources

Modest diversification

The 3 months correlation between Verizon and Galore is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications CDR and Galore Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galore Resources 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 CDR are associated (or correlated) with Galore Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galore Resources has no effect on the direction of Verizon Communications i.e., Verizon Communications and Galore Resources go up and down completely randomly.

Pair Corralation between Verizon Communications and Galore Resources

Assuming the 90 days trading horizon Verizon Communications CDR is expected to under-perform the Galore Resources. But the stock apears to be less risky and, when comparing its historical volatility, Verizon Communications CDR is 21.93 times less risky than Galore Resources. The stock trades about -0.12 of its potential returns per unit of risk. The Galore Resources is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Galore Resources on September 29, 2024 and sell it today you would lose (1.00) from holding Galore Resources or give up 50.0% of portfolio value over 90 days.

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

Verizon Communications CDR  vs.  Galore Resources

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 latest abnormal performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Galore Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Galore Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Galore Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Verizon Communications and Galore Resources

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

The idea behind Verizon Communications CDR and Galore Resources 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.