Correlation Between Amazon and Verizon Communications

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

Diversification Opportunities for Amazon and Verizon Communications

0.58
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Amazon and Verizon is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications and Amazon 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 Amazon Inc 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 Amazon i.e., Amazon and Verizon Communications go up and down completely randomly.

Pair Corralation between Amazon and Verizon Communications

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the Verizon Communications. In addition to that, Amazon is 2.09 times more volatile than Verizon Communications. It trades about -0.03 of its total potential returns per unit of risk. Verizon Communications is currently generating about -0.06 per unit of volatility. If you would invest  5,574  in Verizon Communications on August 30, 2022 and sell it today you would lose (1,750)  from holding Verizon Communications or give up 31.4% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Amazon Inc  vs.  Verizon Communications

 Performance (%) 
       Timeline  
Amazon Inc 
Amazon Performance
0 of 100
Over the last 90 days Amazon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in December 2022. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Amazon 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 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

Amazon and Verizon Communications Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amazon and Verizon Communications

The main advantage of trading using opposite Amazon and Verizon Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon 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.
Amazon vs. Groupon Cl A
Amazon vs. Aarons Holdings
Amazon vs. American Eagle Outfitters
Amazon vs. Abercrombie Fitch
The idea behind Amazon Inc 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.
Verizon Communications vs. SBA Communications
Verizon Communications vs. Caseys General Stor
Verizon Communications vs. Northrop Grumman Corp
Verizon Communications vs. Transocean
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

Other Complementary Tools

Analyst Recommendations
Analyst recommendations and target price estimates broken down by several categories
Go
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Go
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Go
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Go
Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Go
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Go
Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio
Go
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device
Go
Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios
Go