Correlation Between One Choice and Verizon Communications

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Can any of the company-specific risk be diversified away by investing in both One Choice 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 One Choice and Verizon Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between One Choice Blend and Verizon Communications, you can compare the effects of market volatilities on One Choice 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 One Choice with a short position of Verizon Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of One Choice and Verizon Communications.

Diversification Opportunities for One Choice and Verizon Communications

-0.42
  Correlation Coefficient

Very good diversification

The 3 months correlation between AAAOX and Verizon is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding One Choice Blend and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications and One Choice 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 One Choice Blend 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 One Choice i.e., One Choice and Verizon Communications go up and down completely randomly.

Pair Corralation between One Choice and Verizon Communications

Assuming the 90 days horizon One Choice Blend is expected to generate 0.5 times more return on investment than Verizon Communications. However, One Choice Blend is 1.99 times less risky than Verizon Communications. It trades about -0.01 of its potential returns per unit of risk. Verizon Communications is currently generating about -0.03 per unit of risk. If you would invest  976.00  in One Choice Blend on May 18, 2022 and sell it today you would lose (20.00)  from holding One Choice Blend or give up 2.05% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy73.04%
ValuesDaily Returns

One Choice Blend  vs.  Verizon Communications

 Performance (%) 
       Timeline  
One Choice Blend 
AAAOX Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in One Choice Blend are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, One Choice is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

AAAOX Price Channel

Verizon Communications 
Verizon Performance
0 of 100
Over the last 90 days Verizon Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Verizon Communications is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Verizon Price Channel

One Choice and Verizon Communications Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with One Choice and Verizon Communications

The main advantage of trading using opposite One Choice and Verizon Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if One Choice 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.

One Choice Blend

Pair trading matchups for One Choice

The idea behind One Choice Blend and Verizon Communications 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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