Correlation Between Verizon Communications and Advanced Micro

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

Diversification Opportunities for Verizon Communications and Advanced Micro

0.23
  Correlation Coefficient

Modest diversification

The 3 months correlation between Verizon and Advanced is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and Advanced Micro Devices, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Micro Devices, 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 Advanced Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Micro Devices, has no effect on the direction of Verizon Communications i.e., Verizon Communications and Advanced Micro go up and down completely randomly.

Pair Corralation between Verizon Communications and Advanced Micro

Assuming the 90 days horizon Verizon Communications is expected to generate 11.05 times less return on investment than Advanced Micro. But when comparing it to its historical volatility, Verizon Communications is 1.69 times less risky than Advanced Micro. It trades about 0.07 of its potential returns per unit of risk. Advanced Micro Devices, is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest  994,000  in Advanced Micro Devices, on April 22, 2025 and sell it today you would earn a total of  1,026,000  from holding Advanced Micro Devices, or generate 103.22% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Verizon Communications  vs.  Advanced Micro Devices,

 Performance 
       Timeline  
Verizon Communications 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Verizon Communications are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Verizon Communications may actually be approaching a critical reversion point that can send shares even higher in August 2025.
Advanced Micro Devices, 

Risk-Adjusted Performance

Very Strong

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Micro Devices, are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Advanced Micro sustained solid returns over the last few months and may actually be approaching a breakup point.

Verizon Communications and Advanced Micro Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Verizon Communications and Advanced Micro

The main advantage of trading using opposite Verizon Communications and Advanced Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verizon Communications position performs unexpectedly, Advanced Micro 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 Advanced Micro will offset losses from the drop in Advanced Micro's long position.
The idea behind Verizon Communications and Advanced Micro Devices, 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 the Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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