Correlation Between Blueriver Acquisition and Verizon Communications

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

By analyzing existing cross correlation between Blueriver Acquisition Corp and Verizon Communications, you can compare the effects of market volatilities on Blueriver Acquisition 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 Blueriver Acquisition with a short position of Verizon Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blueriver Acquisition and Verizon Communications.

Diversification Opportunities for Blueriver Acquisition and Verizon Communications

0.32

Correlation Coefficient

Blueriver Acquisition  Verizon Communications

Weak diversification

The 3 months correlation between Blueriver and Verizon is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Blueriver Acquisition Corp and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications and Blueriver Acquisition 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 Blueriver Acquisition Corp 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 Blueriver Acquisition i.e., Blueriver Acquisition and Verizon Communications go up and down completely randomly.

Pair Corralation between Blueriver Acquisition and Verizon Communications

Given the investment horizon of 90 days Blueriver Acquisition Corp is expected to generate 0.12 times more return on investment than Verizon Communications. However, Blueriver Acquisition Corp is 8.15 times less risky than Verizon Communications. It trades about 0.41 of its potential returns per unit of risk. Verizon Communications is currently generating about -0.15 per unit of risk. If you would invest  1,083  in Blueriver Acquisition Corp on January 24, 2024 and sell it today you would earn a total of  15.00  from holding Blueriver Acquisition Corp or generate 1.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Blueriver Acquisition Corp  vs.  Verizon Communications

Blueriver Acquisition

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blueriver Acquisition Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Blueriver Acquisition is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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 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.

Pair Trading with Blueriver Acquisition and Verizon Communications

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

The idea behind Blueriver Acquisition Corp 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.

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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.