Correlation Between Telecommunications and Consumer Staples
Can any of the company-specific risk be diversified away by investing in both Telecommunications and Consumer Staples 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 Telecommunications and Consumer Staples into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telecommunications Portfolio Telecommunications and Consumer Staples Portfolio, you can compare the effects of market volatilities on Telecommunications and Consumer Staples 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 Telecommunications with a short position of Consumer Staples. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telecommunications and Consumer Staples.
Diversification Opportunities for Telecommunications and Consumer Staples
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telecommunications and Consumer is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Telecommunications Portfolio T and Consumer Staples Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Staples Por and Telecommunications 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 Telecommunications Portfolio Telecommunications are associated (or correlated) with Consumer Staples. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Staples Por has no effect on the direction of Telecommunications i.e., Telecommunications and Consumer Staples go up and down completely randomly.
Pair Corralation between Telecommunications and Consumer Staples
Assuming the 90 days horizon Telecommunications Portfolio Telecommunications is expected to generate 1.23 times more return on investment than Consumer Staples. However, Telecommunications is 1.23 times more volatile than Consumer Staples Portfolio. It trades about 0.26 of its potential returns per unit of risk. Consumer Staples Portfolio is currently generating about 0.03 per unit of risk. If you would invest 5,464 in Telecommunications Portfolio Telecommunications on August 29, 2024 and sell it today you would earn a total of 310.00 from holding Telecommunications Portfolio Telecommunications or generate 5.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telecommunications Portfolio T vs. Consumer Staples Portfolio
Performance |
| Timeline |
| Telecommunications |
| Consumer Staples Por |
Telecommunications and Consumer Staples Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telecommunications and Consumer Staples
The main advantage of trading using opposite Telecommunications and Consumer Staples positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telecommunications position performs unexpectedly, Consumer Staples 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 Consumer Staples will offset losses from the drop in Consumer Staples' long position.| Telecommunications vs. Fidelity Freedom 2015 | Telecommunications vs. Fidelity Puritan Fund | Telecommunications vs. Fidelity Puritan Fund | Telecommunications vs. Fidelity Pennsylvania Municipal |
| Consumer Staples vs. Kellanova | Consumer Staples vs. Bunge Limited | Consumer Staples vs. BJs Wholesale Club | Consumer Staples vs. Colgate Palmolive |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |