Correlation Between Verizon Communications and Abbvie

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Verizon Communications and Abbvie 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 Abbvie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and Abbvie Inc, you can compare the effects of market volatilities on Verizon Communications and Abbvie 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 Abbvie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verizon Communications and Abbvie.

Diversification Opportunities for Verizon Communications and Abbvie

-0.4
  Correlation Coefficient

Very good diversification

The 3 months correlation between Verizon and Abbvie is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and Abbvie Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abbvie 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 Abbvie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abbvie Inc has no effect on the direction of Verizon Communications i.e., Verizon Communications and Abbvie go up and down completely randomly.

Pair Corralation between Verizon Communications and Abbvie

Allowing for the 90-day total investment horizon Verizon Communications is expected to generate 3.15 times less return on investment than Abbvie. In addition to that, Verizon Communications is 1.19 times more volatile than Abbvie Inc. It trades about 0.11 of its total potential returns per unit of risk. Abbvie Inc is currently generating about 0.4 per unit of volatility. If you would invest  14,640  in Abbvie Inc on August 31, 2022 and sell it today you would earn a total of  1,203  from holding Abbvie Inc or generate 8.22% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy95.24%
ValuesDaily Returns

Verizon Communications  vs.  Abbvie 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 latest weak 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

Abbvie Inc 
Abbvie Performance
13 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Abbvie Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental drivers, Abbvie showed solid returns over the last few months and may actually be approaching a breakup point.

Abbvie Price Channel

Verizon Communications and Abbvie Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Verizon Communications and Abbvie

The main advantage of trading using opposite Verizon Communications and Abbvie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verizon Communications position performs unexpectedly, Abbvie 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 Abbvie will offset losses from the drop in Abbvie's long position.
Verizon Communications vs. SBA Communications
Verizon Communications vs. Apa Corp
Verizon Communications vs. United Microelectronics Corp
Verizon Communications vs. Cosmos Holdings
The idea behind Verizon Communications and Abbvie 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.
Abbvie vs. Abbott Laboratories
Abbvie vs. Alkermes Plc
Abbvie vs. Bio-Rad Laboratories
Abbvie vs. Biomarin Pharmaceuticals
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

Other Complementary Tools

Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Go
Headlines Timeline
Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity
Go
Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio
Go
Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Go
Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
Go
Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Go
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Go
Analyst Recommendations
Analyst recommendations and target price estimates broken down by several categories
Go