Correlation Between Verizon Communications and ATT

Can any of the company-specific risk be diversified away by investing in both Verizon Communications and ATT 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 ATT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Verizon Communications and ATT Inc, you can compare the effects of market volatilities on Verizon Communications and ATT 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 ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verizon Communications and ATT.

Diversification Opportunities for Verizon Communications and ATT

0.62

Correlation Coefficient

Verizon Communications  ATT

Poor diversification

The 3 months correlation between Verizon and ATT is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT 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 ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of Verizon Communications i.e., Verizon Communications and ATT go up and down completely randomly.

Pair Corralation between Verizon Communications and ATT

Allowing for the 90-day total investment horizon Verizon Communications is expected to generate 0.99 times more return on investment than ATT. However, Verizon Communications is 1.01 times less risky than ATT. It trades about 0.06 of its potential returns per unit of risk. ATT Inc is currently generating about 0.05 per unit of risk. If you would invest  3,249  in Verizon Communications on January 25, 2024 and sell it today you would earn a total of  693.00  from holding Verizon Communications or generate 21.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Verizon Communications  vs.  ATT Inc

Verizon Communications

Risk-Adjusted Performance

0 of 100

Very Weak

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.

ATT Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATT Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ATT is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Verizon Communications and ATT

The main advantage of trading using opposite Verizon Communications and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verizon Communications position performs unexpectedly, ATT 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 ATT will offset losses from the drop in ATT's long position.

The idea behind Verizon Communications and ATT 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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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.