Correlation Between Verizon Communications and Matthews Asia

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

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

Diversification Opportunities for Verizon Communications and Matthews Asia

-0.17

Correlation Coefficient

Verizon Communications  Matthews Asia

Good diversification

The 3 months correlation between Verizon and Matthews is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and Matthews Asia Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews Asia Growth 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 Matthews Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews Asia Growth has no effect on the direction of Verizon Communications i.e., Verizon Communications and Matthews Asia go up and down completely randomly.

Pair Corralation between Verizon Communications and Matthews Asia

Allowing for the 90-day total investment horizon Verizon Communications is expected to under-perform the Matthews Asia. In addition to that, Verizon Communications is 1.25 times more volatile than Matthews Asia Growth. It trades about -0.01 of its total potential returns per unit of risk. Matthews Asia Growth is currently generating about 0.12 per unit of volatility. If you would invest  2,317  in Matthews Asia Growth on May 6, 2025 and sell it today you would earn a total of  149.00  from holding Matthews Asia Growth or generate 6.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Verizon Communications  vs.  Matthews Asia Growth

Verizon Communications

Risk-Adjusted Performance

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.

Matthews Asia Growth

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Matthews Asia Growth are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Matthews Asia may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Verizon Communications and Matthews Asia

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

The idea behind Verizon Communications and Matthews Asia Growth 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.