Correlation Between Verizon Communications and Exxon

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Verizon Communications and Exxon 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 Exxon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and Exxon Mobil Corp, you can compare the effects of market volatilities on Verizon Communications and Exxon 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 Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verizon Communications and Exxon.

Diversification Opportunities for Verizon Communications and Exxon

0.11
  Correlation Coefficient

Average diversification

The 3 months correlation between Verizon and Exxon is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and Exxon Mobil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exxon Mobil Corp 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 Exxon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exxon Mobil Corp has no effect on the direction of Verizon Communications i.e., Verizon Communications and Exxon go up and down completely randomly.

Pair Corralation between Verizon Communications and Exxon

Allowing for the 90-day total investment horizon Verizon Communications is expected to under-perform the Exxon. But the stock apears to be less risky and, when comparing its historical volatility, Verizon Communications is 1.16 times less risky than Exxon. The stock trades about -0.27 of its potential returns per unit of risk. The Exxon Mobil Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  8,608  in Exxon Mobil Corp on May 9, 2022 and sell it today you would earn a total of  237.00  from holding Exxon Mobil Corp or generate 2.75% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Verizon Communications  vs.  Exxon Mobil Corp

 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 fairly strong basic indicators, Verizon Communications is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Verizon Price Channel

Exxon Mobil Corp 
Exxon Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Exxon may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Exxon Price Channel

Verizon Communications and Exxon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Verizon Communications and Exxon

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

Other Complementary Tools

Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
Go
Money Flow Index
Determine momentum by analyzing Money Flow Index and other technical indicators
Go
Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets
Go
Headlines Timeline
Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity
Go
Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Go
Premium Stories
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope
Go
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device
Go