Correlation Between Telephone and Telefonica
Can any of the company-specific risk be diversified away by investing in both Telephone 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 Telephone and Telefonica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telephone and Data and Telefonica SA ADR, you can compare the effects of market volatilities on Telephone 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 Telephone with a short position of Telefonica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telephone and Telefonica.
Diversification Opportunities for Telephone and Telefonica
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Telephone and Telefonica is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Telephone and Data 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 Telephone 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 Telephone and Data 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 Telephone i.e., Telephone and Telefonica go up and down completely randomly.
Pair Corralation between Telephone and Telefonica
Assuming the 90 days trading horizon Telephone and Data is expected to generate 1.3 times more return on investment than Telefonica. However, Telephone is 1.3 times more volatile than Telefonica SA ADR. It trades about 0.47 of its potential returns per unit of risk. Telefonica SA ADR is currently generating about 0.04 per unit of risk. If you would invest 1,730 in Telephone and Data on November 1, 2024 and sell it today you would earn a total of 231.00 from holding Telephone and Data or generate 13.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telephone and Data vs. Telefonica SA ADR
Performance |
| Timeline |
| Telephone and Data |
| Telefonica SA ADR |
Telephone and Telefonica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telephone and Telefonica
The main advantage of trading using opposite Telephone and Telefonica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telephone 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.| Telephone vs. Telephone and Data | Telephone vs. ATT Inc | Telephone vs. Liberty Broadband Corp | Telephone vs. SiriusPoint |
| 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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