Correlation Between Verizon Communications and Maple Leaf
Can any of the company-specific risk be diversified away by investing in both Verizon Communications and Maple Leaf 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 Maple Leaf 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 Maple Leaf Foods, you can compare the effects of market volatilities on Verizon Communications and Maple Leaf 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 Maple Leaf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verizon Communications and Maple Leaf.
Diversification Opportunities for Verizon Communications and Maple Leaf
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Verizon and Maple is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications CDR and Maple Leaf Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maple Leaf Foods 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 Maple Leaf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maple Leaf Foods has no effect on the direction of Verizon Communications i.e., Verizon Communications and Maple Leaf go up and down completely randomly.
Pair Corralation between Verizon Communications and Maple Leaf
Assuming the 90 days trading horizon Verizon Communications CDR is expected to generate 0.5 times more return on investment than Maple Leaf. However, Verizon Communications CDR is 1.99 times less risky than Maple Leaf. It trades about -0.03 of its potential returns per unit of risk. Maple Leaf Foods is currently generating about -0.03 per unit of risk. If you would invest 1,829 in Verizon Communications CDR on September 8, 2025 and sell it today you would lose (50.00) from holding Verizon Communications CDR or give up 2.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verizon Communications CDR vs. Maple Leaf Foods
Performance |
| Timeline |
| Verizon Communications |
| Maple Leaf Foods |
Verizon Communications and Maple Leaf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Verizon Communications and Maple Leaf
The main advantage of trading using opposite Verizon Communications and Maple Leaf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verizon Communications position performs unexpectedly, Maple Leaf 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 Maple Leaf will offset losses from the drop in Maple Leaf's long position.The idea behind Verizon Communications CDR and Maple Leaf Foods 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 the Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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