Correlation Between Verizon Communications and Banco Macro

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

Diversification Opportunities for Verizon Communications and Banco Macro

0.5
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Verizon and Banco is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and Banco Macro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Macro SA 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 Banco Macro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Macro SA has no effect on the direction of Verizon Communications i.e., Verizon Communications and Banco Macro go up and down completely randomly.

Pair Corralation between Verizon Communications and Banco Macro

Allowing for the 90-day total investment horizon Verizon Communications is expected to under-perform the Banco Macro. But the stock apears to be less risky and, when comparing its historical volatility, Verizon Communications is 2.53 times less risky than Banco Macro. The stock trades about -0.06 of its potential returns per unit of risk. The Banco Macro SA is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,488  in Banco Macro SA on September 9, 2022 and sell it today you would lose (157.00)  from holding Banco Macro SA or give up 10.55% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Verizon Communications  vs.  Banco Macro SA

 Performance (%) 
       Timeline  
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 latest conflicting 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.

Verizon Price Channel

Banco Macro SA 
Banco Performance
0 of 100
Over the last 90 days Banco Macro SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in January 2023. The current disturbance may also be a sign of long term up-swing for the company investors.

Banco Price Channel

Verizon Communications and Banco Macro Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Verizon Communications and Banco Macro

The main advantage of trading using opposite Verizon Communications and Banco Macro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verizon Communications position performs unexpectedly, Banco Macro 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 Banco Macro will offset losses from the drop in Banco Macro's long position.
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The idea behind Verizon Communications and Banco Macro SA 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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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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