Correlation Between Verizon Communications and Acer Therapeutics

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

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

Diversification Opportunities for Verizon Communications and Acer Therapeutics

-0.32

Correlation Coefficient

Verizon Communications  Acer Therapeutics

Very good diversification

The 3 months correlation between Verizon and Acer is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and Acer Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acer Therapeutics 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 Acer Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acer Therapeutics has no effect on the direction of Verizon Communications i.e., Verizon Communications and Acer Therapeutics go up and down completely randomly.

Pair Corralation between Verizon Communications and Acer Therapeutics

If you would invest  84.00  in Acer Therapeutics on September 21, 2024 and sell it today you would earn a total of  0.00  from holding Acer Therapeutics or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Verizon Communications  vs.  Acer Therapeutics

Verizon Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Verizon Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Acer Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acer Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Acer Therapeutics is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Verizon Communications and Acer Therapeutics

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

The idea behind Verizon Communications and Acer Therapeutics 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.