Correlation Between Verizon Communications and Nielsen Holdings

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

By analyzing existing cross correlation between Verizon Communications and Nielsen Holdings PLC, you can compare the effects of market volatilities on Verizon Communications and Nielsen Holdings 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 Nielsen Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verizon Communications and Nielsen Holdings.

Diversification Opportunities for Verizon Communications and Nielsen Holdings

0.0

Correlation Coefficient

Verizon Communications  Nielsen Holdings

Pay attention - limited upside

The 3 months correlation between Verizon and Nielsen is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and Nielsen Holdings PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nielsen Holdings PLC 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 Nielsen Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nielsen Holdings PLC has no effect on the direction of Verizon Communications i.e., Verizon Communications and Nielsen Holdings go up and down completely randomly.

Pair Corralation between Verizon Communications and Nielsen Holdings

If you would invest (100.00) in Nielsen Holdings PLC on January 25, 2024 and sell it today you would earn a total of  100.00  from holding Nielsen Holdings PLC or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Verizon Communications  vs.  Nielsen Holdings PLC

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.

Nielsen Holdings PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nielsen Holdings PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Nielsen Holdings is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Verizon Communications and Nielsen Holdings

The main advantage of trading using opposite Verizon Communications and Nielsen Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verizon Communications position performs unexpectedly, Nielsen Holdings 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 Nielsen Holdings will offset losses from the drop in Nielsen Holdings' long position.

The idea behind Verizon Communications and Nielsen Holdings PLC 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.