Correlation Between Verizon Communications and Intel Corp

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

Diversification Opportunities for Verizon Communications and Intel Corp

0.25
  Correlation Coefficient

Modest diversification

The 3 months correlation between Verizon and Intel is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and Intel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel Corp 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 Intel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel Corp has no effect on the direction of Verizon Communications i.e., Verizon Communications and Intel Corp go up and down completely randomly.

Pair Corralation between Verizon Communications and Intel Corp

Allowing for the 90-day total investment horizon Verizon Communications is expected to generate 0.51 times more return on investment than Intel Corp. However, Verizon Communications is 1.97 times less risky than Intel Corp. It trades about -0.03 of its potential returns per unit of risk. Intel Corp is currently generating about -0.02 per unit of risk. If you would invest  5,383  in Verizon Communications on May 13, 2022 and sell it today you would lose (899.00)  from holding Verizon Communications or give up 16.7% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Verizon Communications  vs.  Intel Corp

 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 fairly strong basic indicators, Verizon Communications is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Verizon Price Channel

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 weak 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 and Intel Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Verizon Communications and Intel Corp

The main advantage of trading using opposite Verizon Communications and Intel Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verizon Communications position performs unexpectedly, Intel Corp 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 Intel Corp will offset losses from the drop in Intel Corp's long position.
The idea behind Verizon Communications and Intel Corp 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 Shere Portfolio module to track or share privately all of your investments from the convenience of any device.

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