Correlation Between Telefonica and Softbank Group
Can any of the company-specific risk be diversified away by investing in both Telefonica and Softbank Group 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 Softbank Group 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 Softbank Group Corp, you can compare the effects of market volatilities on Telefonica and Softbank Group 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 Softbank Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonica and Softbank Group.
Diversification Opportunities for Telefonica and Softbank Group
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Telefonica and Softbank is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Telefonica SA ADR and Softbank Group Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Softbank Group Corp 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 Softbank Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Softbank Group Corp has no effect on the direction of Telefonica i.e., Telefonica and Softbank Group go up and down completely randomly.
Pair Corralation between Telefonica and Softbank Group
Considering the 90-day investment horizon Telefonica is expected to generate 1.68 times less return on investment than Softbank Group. But when comparing it to its historical volatility, Telefonica SA ADR is 2.3 times less risky than Softbank Group. It trades about 0.05 of its potential returns per unit of risk. Softbank Group Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 4,630 in Softbank Group Corp on August 28, 2024 and sell it today you would earn a total of 1,095 from holding Softbank Group Corp or generate 23.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Telefonica SA ADR vs. Softbank Group Corp
Performance |
| Timeline |
| Telefonica SA ADR |
| Softbank Group Corp |
Telefonica and Softbank Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonica and Softbank Group
The main advantage of trading using opposite Telefonica and Softbank Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonica position performs unexpectedly, Softbank Group 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 Softbank Group will offset losses from the drop in Softbank Group's long position.| Telefonica vs. Liberty Broadband Srs | Telefonica vs. Ribbon Communications | Telefonica vs. Liberty Broadband Srs | Telefonica vs. Shenandoah Telecommunications Co |
| Softbank Group vs. Vodafone Group PLC | Softbank Group vs. KDDI Corp | Softbank Group vs. Amrica Mvil, SAB | Softbank Group 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |