Verizon stock (NYSE: VZ) increased almost 7.5% in the last 3 months and currently trades at $59 per share. The rise was driven by the company’s increased focus on investing in 5G expansion and tie-up with Disney which has reduced the subscriber churn rate. But will the company’s stock continue its upward trajectory over the coming weeks, or is a correction in the stock more likely?
According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price data for the last 20 years, returns for Verizon stock average only 0.2% in the next three-month (63 trading days) period after experiencing a 7.5% rise over the previous three-month (63 trading days) period. Notably, though, the stock is likely to underperform the S&P500 over the next three months (63 trading days), with an expected excess return of –1.3% compared to the S&P500.
But how would these numbers change if you are interested in holding Verizon stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning to test Verizon stock chances of a rise after a fall and vice versa. You can test the chance of recovery over different time intervals of a quarter, month, or even just 1 day!
MACHINE LEARNING ENGINE – try it yourself:
IF Verizon stock moved by -5% over 5 trading days, THEN over the next 21 trading days, Verizon stock moves an average of 2.9 percent, which implies an excess return of 1.7 percent compared to the S&P500.
More importantly, there is 59% probability of a positive return over the next 21 trading days and 58% probability of a positive excess return after a -5% change over 5 trading days.
Some Fun Scenarios, FAQs & Making Sense of Verizon Stock Movements:
Question 1: Is the average return for Verizon stock higher after a drop?
Consider two situations,
Case 1: Verizon stock drops by -5% or more in a week
Case 2: Verizon stock rises by 5% or more in a week
Is the average return for Verizon stock higher over the subsequent month after Case 1 or Case 2?
VZ stock fares better after Case 1, with an average return of 4.7% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 1.7% for Case 2.
In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.
Try the Trefis machine learning engine above to see for yourself how Verizon stock is likely to behave after any specific gain or loss over a period.
Question 2: Does patience pay?
If you buy and hold Verizon stock, the expectation is over time the near term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.
Overall, according to data and the Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!
For VZ stock, the returns over the next N days after a -5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:
Question 3: What about the average return after a rise if you wait for a while?
The average return after a rise is understandably lower than a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.
VZ’s returns over the next N days after a 5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:
It’s pretty powerful to test the trend for yourself for Verizon stock by changing the inputs in the charts above.
What if you’re looking for a more balanced portfolio instead? Here’s a high quality portfolio to beat the market, with over 100% return since 2016, versus 55% for the S&P 500. Comprised of companies with strong revenue growth, healthy profits, lots of cash, and low risk, it has outperformed the broader market year after year, consistently.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.