Correlation Between Telefonica and Charter Communications
Can any of the company-specific risk be diversified away by investing in both Telefonica and Charter Communications 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 Charter Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telefonica SA ADR and Charter Communications, you can compare the effects of market volatilities on Telefonica and Charter Communications 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 Charter Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonica and Charter Communications.
Diversification Opportunities for Telefonica and Charter Communications
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Telefonica and Charter is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Telefonica SA ADR and Charter Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications 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 SA ADR are associated (or correlated) with Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of Telefonica i.e., Telefonica and Charter Communications go up and down completely randomly.
Pair Corralation between Telefonica and Charter Communications
Considering the 90-day investment horizon Telefonica SA ADR is expected to generate 0.47 times more return on investment than Charter Communications. However, Telefonica SA ADR is 2.13 times less risky than Charter Communications. It trades about 0.05 of its potential returns per unit of risk. Charter Communications is currently generating about 0.01 per unit of risk. If you would invest 396.00 in Telefonica SA ADR on August 26, 2024 and sell it today you would earn a total of 49.00 from holding Telefonica SA ADR or generate 12.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telefonica SA ADR vs. Charter Communications
Performance |
| Timeline |
| Telefonica SA ADR |
| Charter Communications |
Telefonica and Charter Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonica and Charter Communications
The main advantage of trading using opposite Telefonica and Charter Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonica position performs unexpectedly, Charter Communications 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 Charter Communications will offset losses from the drop in Charter Communications' long position.| Telefonica vs. Liberty Broadband Srs | Telefonica vs. Ribbon Communications | Telefonica vs. Liberty Broadband Srs | Telefonica vs. Shenandoah Telecommunications Co |
| Charter Communications vs. T Mobile | Charter Communications vs. Verizon Communications | Charter Communications vs. ATT Inc | Charter Communications vs. Liberty Broadband Srs |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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