Correlation Between Telecomunicaes Brasileiras and Starbucks
Can any of the company-specific risk be diversified away by investing in both Telecomunicaes Brasileiras and Starbucks 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 Telecomunicaes Brasileiras and Starbucks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telecomunicaes Brasileiras SA and Starbucks, you can compare the effects of market volatilities on Telecomunicaes Brasileiras and Starbucks 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 Telecomunicaes Brasileiras with a short position of Starbucks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telecomunicaes Brasileiras and Starbucks.
Diversification Opportunities for Telecomunicaes Brasileiras and Starbucks
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telecomunicaes and Starbucks is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Telecomunicaes Brasileiras SA and Starbucks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks and Telecomunicaes Brasileiras 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 Telecomunicaes Brasileiras SA are associated (or correlated) with Starbucks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starbucks has no effect on the direction of Telecomunicaes Brasileiras i.e., Telecomunicaes Brasileiras and Starbucks go up and down completely randomly.
Pair Corralation between Telecomunicaes Brasileiras and Starbucks
Assuming the 90 days trading horizon Telecomunicaes Brasileiras SA is expected to under-perform the Starbucks. In addition to that, Telecomunicaes Brasileiras is 1.3 times more volatile than Starbucks. It trades about -0.27 of its total potential returns per unit of risk. Starbucks is currently generating about 0.17 per unit of volatility. If you would invest 57,262 in Starbucks on September 2, 2024 and sell it today you would earn a total of 3,476 from holding Starbucks or generate 6.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telecomunicaes Brasileiras SA vs. Starbucks
Performance |
| Timeline |
| Telecomunicaes Brasileiras |
| Starbucks |
Telecomunicaes Brasileiras and Starbucks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telecomunicaes Brasileiras and Starbucks
The main advantage of trading using opposite Telecomunicaes Brasileiras and Starbucks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telecomunicaes Brasileiras position performs unexpectedly, Starbucks 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 Starbucks will offset losses from the drop in Starbucks' long position.| Telecomunicaes Brasileiras vs. Lupatech SA | Telecomunicaes Brasileiras vs. Rossi Residencial SA | Telecomunicaes Brasileiras vs. Usinas Siderrgicas de | Telecomunicaes Brasileiras vs. Refinaria de Petrleos |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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