Correlation Between Telefonica and Lumen Technologies
Can any of the company-specific risk be diversified away by investing in both Telefonica and Lumen Technologies 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 Lumen Technologies 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 Lumen Technologies, you can compare the effects of market volatilities on Telefonica and Lumen Technologies 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 Lumen Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonica and Lumen Technologies.
Diversification Opportunities for Telefonica and Lumen Technologies
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telefonica and Lumen is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Telefonica SA ADR and Lumen Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumen Technologies 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 Lumen Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumen Technologies has no effect on the direction of Telefonica i.e., Telefonica and Lumen Technologies go up and down completely randomly.
Pair Corralation between Telefonica and Lumen Technologies
Considering the 90-day investment horizon Telefonica is expected to generate 3.7 times less return on investment than Lumen Technologies. But when comparing it to its historical volatility, Telefonica SA ADR is 5.35 times less risky than Lumen Technologies. It trades about 0.06 of its potential returns per unit of risk. Lumen Technologies is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 551.00 in Lumen Technologies on August 23, 2024 and sell it today you would earn a total of 234.00 from holding Lumen Technologies or generate 42.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telefonica SA ADR vs. Lumen Technologies
Performance |
| Timeline |
| Telefonica SA ADR |
| Lumen Technologies |
Telefonica and Lumen Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonica and Lumen Technologies
The main advantage of trading using opposite Telefonica and Lumen Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonica position performs unexpectedly, Lumen Technologies 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 Lumen Technologies will offset losses from the drop in Lumen Technologies' long position.| Telefonica vs. Orange SA ADR | Telefonica vs. SK Telecom Co | Telefonica vs. America Movil SAB | Telefonica vs. KT Corporation |
| Lumen Technologies vs. Verizon Communications | Lumen Technologies vs. T Mobile | Lumen Technologies vs. Comcast Corp | Lumen Technologies vs. ATT Inc |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |