Correlation Between Verizon Communications and Grupo Televisa

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

Diversification Opportunities for Verizon Communications and Grupo Televisa

0.91
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Verizon and Grupo is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and Grupo Televisa Sa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Televisa 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 Grupo Televisa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Televisa Sa has no effect on the direction of Verizon Communications i.e., Verizon Communications and Grupo Televisa go up and down completely randomly.

Pair Corralation between Verizon Communications and Grupo Televisa

Allowing for the 90-day total investment horizon Verizon Communications is expected to generate 0.44 times more return on investment than Grupo Televisa. However, Verizon Communications is 2.26 times less risky than Grupo Televisa. It trades about -0.08 of its potential returns per unit of risk. Grupo Televisa Sa is currently generating about -0.09 per unit of risk. If you would invest  5,483  in Verizon Communications on July 5, 2022 and sell it today you would lose (1,567)  from holding Verizon Communications or give up 28.58% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Verizon Communications  vs.  Grupo Televisa 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 conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in November 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Verizon Price Channel

Grupo Televisa Sa 
Grupo Performance
0 of 100
Over the last 90 days Grupo Televisa Sa has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in November 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Grupo Price Channel

Verizon Communications and Grupo Televisa Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Verizon Communications and Grupo Televisa

The main advantage of trading using opposite Verizon Communications and Grupo Televisa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verizon Communications position performs unexpectedly, Grupo Televisa 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 Grupo Televisa will offset losses from the drop in Grupo Televisa's long position.
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The idea behind Verizon Communications and Grupo Televisa 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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