Correlation Between Telefonica and Koninklijke KPN
Can any of the company-specific risk be diversified away by investing in both Telefonica and Koninklijke KPN 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 Koninklijke KPN 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 Koninklijke KPN NV, you can compare the effects of market volatilities on Telefonica and Koninklijke KPN 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 Koninklijke KPN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonica and Koninklijke KPN.
Diversification Opportunities for Telefonica and Koninklijke KPN
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telefonica and Koninklijke is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Telefonica SA ADR and Koninklijke KPN NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koninklijke KPN NV 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 Koninklijke KPN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koninklijke KPN NV has no effect on the direction of Telefonica i.e., Telefonica and Koninklijke KPN go up and down completely randomly.
Pair Corralation between Telefonica and Koninklijke KPN
If you would invest 334.00 in Koninklijke KPN NV on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Koninklijke KPN NV or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Telefonica SA ADR vs. Koninklijke KPN NV
Performance |
| Timeline |
| Telefonica SA ADR |
| Koninklijke KPN NV |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Telefonica and Koninklijke KPN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonica and Koninklijke KPN
The main advantage of trading using opposite Telefonica and Koninklijke KPN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonica position performs unexpectedly, Koninklijke KPN 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 Koninklijke KPN will offset losses from the drop in Koninklijke KPN's long position.| Telefonica vs. Liberty Broadband Srs | Telefonica vs. Ribbon Communications | Telefonica vs. Liberty Broadband Srs | Telefonica vs. Shenandoah Telecommunications Co |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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