Correlation Between TelstraLimited and Proximus
Can any of the company-specific risk be diversified away by investing in both TelstraLimited and Proximus 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 TelstraLimited and Proximus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telstra Limited and Proximus NV ADR, you can compare the effects of market volatilities on TelstraLimited and Proximus 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 TelstraLimited with a short position of Proximus. Check out your portfolio center. Please also check ongoing floating volatility patterns of TelstraLimited and Proximus.
Diversification Opportunities for TelstraLimited and Proximus
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TelstraLimited and Proximus is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Telstra Limited and Proximus NV ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Proximus NV ADR and TelstraLimited 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 Telstra Limited are associated (or correlated) with Proximus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Proximus NV ADR has no effect on the direction of TelstraLimited i.e., TelstraLimited and Proximus go up and down completely randomly.
Pair Corralation between TelstraLimited and Proximus
Assuming the 90 days horizon Telstra Limited is expected to generate 0.95 times more return on investment than Proximus. However, Telstra Limited is 1.06 times less risky than Proximus. It trades about 0.0 of its potential returns per unit of risk. Proximus NV ADR is currently generating about -0.17 per unit of risk. If you would invest 240.00 in Telstra Limited on August 29, 2024 and sell it today you would lose (2.00) from holding Telstra Limited or give up 0.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telstra Limited vs. Proximus NV ADR
Performance |
| Timeline |
| Telstra Limited |
| Proximus NV ADR |
TelstraLimited and Proximus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TelstraLimited and Proximus
The main advantage of trading using opposite TelstraLimited and Proximus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TelstraLimited position performs unexpectedly, Proximus 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 Proximus will offset losses from the drop in Proximus' long position.| TelstraLimited vs. KDDI Corp | TelstraLimited vs. Amrica Mvil, SAB | TelstraLimited vs. ATT Inc | TelstraLimited vs. FingerMotion |
| Proximus vs. Singapore Telecommunications Limited | Proximus vs. Telstra Limited | Proximus vs. MTN Group Ltd | Proximus vs. Tele2 AB |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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