Correlation Between Intel Corp and Verizon Communications

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

Diversification Opportunities for Intel Corp and Verizon Communications

0.3
  Correlation Coefficient

Weak diversification

The 3 months correlation between Intel and Verizon is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Intel Corp and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications and Intel Corp 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 Intel Corp 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 Intel Corp i.e., Intel Corp and Verizon Communications go up and down completely randomly.

Pair Corralation between Intel Corp and Verizon Communications

Given the investment horizon of 90 days Intel Corp is expected to generate 1.43 times more return on investment than Verizon Communications. However, Intel Corp is 1.43 times more volatile than Verizon Communications. It trades about -0.05 of its potential returns per unit of risk. Verizon Communications is currently generating about -0.28 per unit of risk. If you would invest  3,683  in Intel Corp on May 14, 2022 and sell it today you would lose (124.00)  from holding Intel Corp or give up 3.37% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Intel Corp  vs.  Verizon Communications

 Performance (%) 
       Timeline  
Intel Corp 
Intel Performance
0 of 100
Over the last 90 days Intel Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in September 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Intel Price Channel

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 latest sluggish performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Verizon Price Channel

Intel Corp and Verizon Communications Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Intel Corp and Verizon Communications

The main advantage of trading using opposite Intel Corp and Verizon Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel Corp 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 Intel Corp 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.
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 CEO Directory module to screen CEOs from public companies around the world.

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