Correlation Between Valneva SE and Verizon Communications

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

Diversification Opportunities for Valneva SE and Verizon Communications

-0.59
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Valneva and Verizon is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Valneva SE ADR and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications and Valneva SE 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 Valneva SE 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 Valneva SE i.e., Valneva SE and Verizon Communications go up and down completely randomly.

Pair Corralation between Valneva SE and Verizon Communications

Given the investment horizon of 90 days Valneva SE ADR is expected to generate 4.2 times more return on investment than Verizon Communications. However, Valneva SE is 4.2 times more volatile than Verizon Communications. It trades about 0.15 of its potential returns per unit of risk. Verizon Communications is currently generating about 0.23 per unit of risk. If you would invest  723.00  in Valneva SE ADR on December 29, 2023 and sell it today you would earn a total of  73.00  from holding Valneva SE ADR or generate 10.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Valneva SE ADR  vs.  Verizon Communications

 Performance 
       Timeline  
Valneva SE ADR 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Valneva SE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in April 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.
Verizon Communications 

Risk-Adjusted Performance

10 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Verizon Communications are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Verizon Communications may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Valneva SE and Verizon Communications Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Valneva SE and Verizon Communications

The main advantage of trading using opposite Valneva SE and Verizon Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valneva SE 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 Valneva SE ADR 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

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