Correlation Between ATN International and Telefonica
Can any of the company-specific risk be diversified away by investing in both ATN International and Telefonica 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 ATN International and Telefonica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATN International and Telefonica SA ADR, you can compare the effects of market volatilities on ATN International and Telefonica 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 ATN International with a short position of Telefonica. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATN International and Telefonica.
Diversification Opportunities for ATN International and Telefonica
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ATN and Telefonica is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding ATN International and Telefonica SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefonica SA ADR and ATN International 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 ATN International are associated (or correlated) with Telefonica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telefonica SA ADR has no effect on the direction of ATN International i.e., ATN International and Telefonica go up and down completely randomly.
Pair Corralation between ATN International and Telefonica
Given the investment horizon of 90 days ATN International is expected to under-perform the Telefonica. In addition to that, ATN International is 2.37 times more volatile than Telefonica SA ADR. It trades about -0.13 of its total potential returns per unit of risk. Telefonica SA ADR is currently generating about 0.04 per unit of volatility. If you would invest 402.00 in Telefonica SA ADR on November 1, 2024 and sell it today you would earn a total of 3.00 from holding Telefonica SA ADR or generate 0.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ATN International vs. Telefonica SA ADR
Performance |
| Timeline |
| ATN International |
| Telefonica SA ADR |
ATN International and Telefonica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATN International and Telefonica
The main advantage of trading using opposite ATN International and Telefonica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATN International position performs unexpectedly, Telefonica 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 Telefonica will offset losses from the drop in Telefonica's long position.| ATN International vs. KT Corporation | ATN International vs. SK Telecom Co | ATN International vs. Ooma Inc | ATN International vs. Liberty Broadband Srs |
| Telefonica vs. SK Telecom Co | Telefonica vs. America Movil SAB | Telefonica vs. KT Corporation | Telefonica vs. Telefonica Brasil SA |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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