Correlation Between Cellnex Telecom and Iberdrola
Can any of the company-specific risk be diversified away by investing in both Cellnex Telecom and Iberdrola 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 Cellnex Telecom and Iberdrola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cellnex Telecom SA and Iberdrola SA, you can compare the effects of market volatilities on Cellnex Telecom and Iberdrola 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 Cellnex Telecom with a short position of Iberdrola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cellnex Telecom and Iberdrola.
Diversification Opportunities for Cellnex Telecom and Iberdrola
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cellnex and Iberdrola is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Cellnex Telecom SA and Iberdrola SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iberdrola SA and Cellnex Telecom 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 Cellnex Telecom SA are associated (or correlated) with Iberdrola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iberdrola SA has no effect on the direction of Cellnex Telecom i.e., Cellnex Telecom and Iberdrola go up and down completely randomly.
Pair Corralation between Cellnex Telecom and Iberdrola
Assuming the 90 days trading horizon Cellnex Telecom SA is expected to generate 2.49 times more return on investment than Iberdrola. However, Cellnex Telecom is 2.49 times more volatile than Iberdrola SA. It trades about 0.09 of its potential returns per unit of risk. Iberdrola SA is currently generating about 0.11 per unit of risk. If you would invest 3,118 in Cellnex Telecom SA on November 3, 2024 and sell it today you would earn a total of 121.00 from holding Cellnex Telecom SA or generate 3.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cellnex Telecom SA vs. Iberdrola SA
Performance |
| Timeline |
| Cellnex Telecom SA |
| Iberdrola SA |
Cellnex Telecom and Iberdrola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cellnex Telecom and Iberdrola
The main advantage of trading using opposite Cellnex Telecom and Iberdrola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cellnex Telecom position performs unexpectedly, Iberdrola 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 Iberdrola will offset losses from the drop in Iberdrola's long position.| Cellnex Telecom vs. Grifols SA | Cellnex Telecom vs. Aena SA | Cellnex Telecom vs. ACS Actividades de | Cellnex Telecom vs. Ferrovial 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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