Correlation Between Verizon Communications and MASSMU

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

By analyzing existing cross correlation between Verizon Communications and MASSMU 5672 01 DEC 52, you can compare the effects of market volatilities on Verizon Communications and MASSMU 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 MASSMU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verizon Communications and MASSMU.

Diversification Opportunities for Verizon Communications and MASSMU

-0.59

Correlation Coefficient

Verizon Communications  MASSMU

Excellent diversification

The 3 months correlation between Verizon and MASSMU is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and MASSMU 5672 01 DEC 52 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MASSMU 5672 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 MASSMU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MASSMU 5672 01 has no effect on the direction of Verizon Communications i.e., Verizon Communications and MASSMU go up and down completely randomly.

Pair Corralation between Verizon Communications and MASSMU

Allowing for the 90-day total investment horizon Verizon Communications is expected to generate 0.48 times more return on investment than MASSMU. However, Verizon Communications is 2.06 times less risky than MASSMU. It trades about -0.1 of its potential returns per unit of risk. MASSMU 5672 01 DEC 52 is currently generating about -0.14 per unit of risk. If you would invest  4,358  in Verizon Communications on September 21, 2024 and sell it today you would lose (361.00) from holding Verizon Communications or give up 8.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	46.03%
Values	Daily Returns

Verizon Communications  vs.  MASSMU 5672 01 DEC 52

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.

MASSMU 5672 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MASSMU 5672 01 DEC 52 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for MASSMU 5672 01 DEC 52 investors.

Pair Trading with Verizon Communications and MASSMU

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

The idea behind Verizon Communications and MASSMU 5672 01 DEC 52 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.