Correlation Between Xunlei and Verizon Communications
Can any of the company-specific risk be diversified away by investing in both Xunlei 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 Xunlei and Verizon Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xunlei Ltd Adr and Verizon Communications, you can compare the effects of market volatilities on Xunlei 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 Xunlei with a short position of Verizon Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xunlei and Verizon Communications.
Diversification Opportunities for Xunlei and Verizon Communications
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Xunlei and Verizon is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Xunlei Ltd Adr and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications and Xunlei 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 Xunlei Ltd Adr 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 Xunlei i.e., Xunlei and Verizon Communications go up and down completely randomly.
Pair Corralation between Xunlei and Verizon Communications
Given the investment horizon of 90 days Xunlei Ltd Adr is expected to generate 1.03 times more return on investment than Verizon Communications. However, Xunlei is 1.03 times more volatile than Verizon Communications. It trades about 0.19 of its potential returns per unit of risk. Verizon Communications is currently generating about -0.03 per unit of risk. If you would invest 147.00 in Xunlei Ltd Adr on January 24, 2024 and sell it today you would earn a total of 9.00 from holding Xunlei Ltd Adr or generate 6.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xunlei Ltd Adr vs. Verizon Communications
Performance |
| Timeline |
| Xunlei Ltd Adr |
| Verizon Communications |
Xunlei and Verizon Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xunlei and Verizon Communications
The main advantage of trading using opposite Xunlei and Verizon Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xunlei 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.| Xunlei vs. Travelzoo | Xunlei vs. Emerald Expositions Events | Xunlei vs. Direct Digital Holdings | Xunlei vs. Glory Star New |
| Verizon Communications vs. T Mobile | Verizon Communications vs. Comcast Corp | Verizon Communications vs. Charter Communications | Verizon Communications vs. Vodafone Group PLC |
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 the Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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