Correlation Between Telefonica and Robot SA
Can any of the company-specific risk be diversified away by investing in both Telefonica and Robot SA 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 Robot SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telefonica and Robot SA, you can compare the effects of market volatilities on Telefonica and Robot SA 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 Robot SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonica and Robot SA.
Diversification Opportunities for Telefonica and Robot SA
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telefonica and Robot is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Telefonica and Robot SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Robot SA 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 Robot SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Robot SA has no effect on the direction of Telefonica i.e., Telefonica and Robot SA go up and down completely randomly.
Pair Corralation between Telefonica and Robot SA
Assuming the 90 days trading horizon Telefonica is expected to generate 0.46 times more return on investment than Robot SA. However, Telefonica is 2.19 times less risky than Robot SA. It trades about 0.07 of its potential returns per unit of risk. Robot SA is currently generating about 0.01 per unit of risk. If you would invest 314.00 in Telefonica on August 27, 2024 and sell it today you would earn a total of 116.00 from holding Telefonica or generate 36.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 88.74% |
| Values | Daily Returns |
Telefonica vs. Robot SA
Performance |
| Timeline |
| Telefonica |
| Robot SA |
Telefonica and Robot SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonica and Robot SA
The main advantage of trading using opposite Telefonica and Robot SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonica position performs unexpectedly, Robot SA 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 Robot SA will offset losses from the drop in Robot SA's long position.The idea behind Telefonica and Robot SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Robot SA vs. Metrovacesa SA | Robot SA vs. Elecnor SA | Robot SA vs. Mapfre | Robot SA vs. Tander Inversiones SOCIMI |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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