Correlation Between Verizon Communications and Laurentian Bank

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

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

Diversification Opportunities for Verizon Communications and Laurentian Bank

-0.39

Correlation Coefficient

Verizon Communications  Laurentian Bank

Very good diversification

The 3 months correlation between Verizon and Laurentian is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications CDR and Laurentian Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laurentian Bank 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 CDR are associated (or correlated) with Laurentian Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laurentian Bank has no effect on the direction of Verizon Communications i.e., Verizon Communications and Laurentian Bank go up and down completely randomly.

Pair Corralation between Verizon Communications and Laurentian Bank

Assuming the 90 days trading horizon Verizon Communications is expected to generate 11.2 times less return on investment than Laurentian Bank. In addition to that, Verizon Communications is 1.96 times more volatile than Laurentian Bank of. It trades about 0.02 of its total potential returns per unit of risk. Laurentian Bank of is currently generating about 0.36 per unit of volatility. If you would invest  2,015  in Laurentian Bank of on April 24, 2025 and sell it today you would earn a total of  320.00  from holding Laurentian Bank of or generate 15.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Verizon Communications CDR  vs.  Laurentian Bank of

Verizon Communications

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Verizon Communications CDR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Verizon Communications is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Laurentian Bank

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Laurentian Bank of are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Laurentian Bank unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Verizon Communications and Laurentian Bank

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

The idea behind Verizon Communications CDR and Laurentian Bank of 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.