Correlation Between Telefonica and ACS Actividades
Can any of the company-specific risk be diversified away by investing in both Telefonica and ACS Actividades 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 Telefonica and ACS Actividades into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telefonica and ACS Actividades de, you can compare the effects of market volatilities on Telefonica and ACS Actividades 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 Telefonica with a short position of ACS Actividades. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonica and ACS Actividades.
Diversification Opportunities for Telefonica and ACS Actividades
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telefonica and ACS is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Telefonica and ACS Actividades de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACS Actividades de and Telefonica 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 Telefonica are associated (or correlated) with ACS Actividades. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACS Actividades de has no effect on the direction of Telefonica i.e., Telefonica and ACS Actividades go up and down completely randomly.
Pair Corralation between Telefonica and ACS Actividades
Assuming the 90 days trading horizon Telefonica is expected to under-perform the ACS Actividades. But the stock apears to be less risky and, when comparing its historical volatility, Telefonica is 1.61 times less risky than ACS Actividades. The stock trades about -0.02 of its potential returns per unit of risk. The ACS Actividades de is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4,836 in ACS Actividades de on November 2, 2024 and sell it today you would earn a total of 86.00 from holding ACS Actividades de or generate 1.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telefonica vs. ACS Actividades de
Performance |
| Timeline |
| Telefonica |
| ACS Actividades de |
Telefonica and ACS Actividades Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonica and ACS Actividades
The main advantage of trading using opposite Telefonica and ACS Actividades positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonica position performs unexpectedly, ACS Actividades 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 ACS Actividades will offset losses from the drop in ACS Actividades' long position.| Telefonica vs. Banco Santander | Telefonica vs. Repsol | Telefonica vs. Iberdrola SA | Telefonica vs. Banco Bilbao Vizcaya |
| ACS Actividades vs. Mapfre | ACS Actividades vs. Enags SA | ACS Actividades vs. Ferrovial SA | ACS Actividades vs. Endesa 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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