Correlation Between Dow Jones and Telefnica Brasil
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Telefnica Brasil 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 Dow Jones and Telefnica Brasil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Telefnica Brasil SA, you can compare the effects of market volatilities on Dow Jones and Telefnica Brasil 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 Dow Jones with a short position of Telefnica Brasil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Telefnica Brasil.
Diversification Opportunities for Dow Jones and Telefnica Brasil
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Telefnica is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Telefnica Brasil SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefnica Brasil and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Telefnica Brasil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telefnica Brasil has no effect on the direction of Dow Jones i.e., Dow Jones and Telefnica Brasil go up and down completely randomly.
Pair Corralation between Dow Jones and Telefnica Brasil
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.64 times more return on investment than Telefnica Brasil. However, Dow Jones Industrial is 1.55 times less risky than Telefnica Brasil. It trades about 0.26 of its potential returns per unit of risk. Telefnica Brasil SA is currently generating about -0.18 per unit of risk. If you would invest 4,238,757 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 234,900 from holding Dow Jones Industrial or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Dow Jones Industrial vs. Telefnica Brasil SA
Performance |
| Timeline |
Dow Jones and Telefnica Brasil Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Telefnica Brasil SA
Pair trading matchups for Telefnica Brasil
Pair Trading with Dow Jones and Telefnica Brasil
The main advantage of trading using opposite Dow Jones and Telefnica Brasil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Telefnica Brasil 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 Telefnica Brasil will offset losses from the drop in Telefnica Brasil's long position.| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
| Telefnica Brasil vs. Engie Brasil Energia | Telefnica Brasil vs. BB Seguridade Participacoes | Telefnica Brasil vs. Transmissora Aliana de | Telefnica Brasil vs. CTEEP Companhia |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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