Correlation Between Deutsche Telekom and American Nortel
Can any of the company-specific risk be diversified away by investing in both Deutsche Telekom and American Nortel 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 Deutsche Telekom and American Nortel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche Telekom AG and American Nortel Communications, you can compare the effects of market volatilities on Deutsche Telekom and American Nortel 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 Deutsche Telekom with a short position of American Nortel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Telekom and American Nortel.
Diversification Opportunities for Deutsche Telekom and American Nortel
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Deutsche and American is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Telekom AG and American Nortel Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Nortel Comm and Deutsche Telekom 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 Deutsche Telekom AG are associated (or correlated) with American Nortel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Nortel Comm has no effect on the direction of Deutsche Telekom i.e., Deutsche Telekom and American Nortel go up and down completely randomly.
Pair Corralation between Deutsche Telekom and American Nortel
If you would invest 2.49 in American Nortel Communications on August 28, 2024 and sell it today you would earn a total of 0.18 from holding American Nortel Communications or generate 7.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Deutsche Telekom AG vs. American Nortel Communications
Performance |
| Timeline |
| Deutsche Telekom |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| American Nortel Comm |
Deutsche Telekom and American Nortel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Telekom and American Nortel
The main advantage of trading using opposite Deutsche Telekom and American Nortel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Telekom position performs unexpectedly, American Nortel 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 American Nortel will offset losses from the drop in American Nortel's long position.| Deutsche Telekom vs. KDDI Corp PK | Deutsche Telekom vs. Nippon Telegraph Telephone | Deutsche Telekom vs. Softbank Group Corp | Deutsche Telekom vs. KT Corporation |
| American Nortel vs. Vodafone Group PLC | American Nortel vs. KDDI Corp | American Nortel vs. Amrica Mvil, SAB | American Nortel vs. ATT Inc |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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