Correlation Between Verizon Communications and Apple

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

Diversification Opportunities for Verizon Communications and Apple

-0.43
  Correlation Coefficient

Very good diversification

The 3 months correlation between Verizon and Apple is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Verizon Communications i.e., Verizon Communications and Apple go up and down completely randomly.

Pair Corralation between Verizon Communications and Apple

Allowing for the 90-day total investment horizon Verizon Communications is expected to under-perform the Apple. But the stock apears to be less risky and, when comparing its historical volatility, Verizon Communications is 1.54 times less risky than Apple. The stock trades about -0.33 of its potential returns per unit of risk. The Apple Inc is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest  16,138  in Apple Inc on June 30, 2022 and sell it today you would lose (1,154)  from holding Apple Inc or give up 7.15% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Verizon Communications  vs.  Apple Inc

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

Verizon Price Channel

Apple Inc 
Apple Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in October 2022.

Apple Price Channel

Verizon Communications and Apple Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Verizon Communications and Apple

The main advantage of trading using opposite Verizon Communications and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verizon Communications position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.
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The idea behind Verizon Communications and Apple Inc 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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