Correlation Between Telefonica Brasil and Lumen Technologies
Can any of the company-specific risk be diversified away by investing in both Telefonica Brasil 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 Brasil 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 Brasil SA and Lumen Technologies, you can compare the effects of market volatilities on Telefonica Brasil 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 Brasil with a short position of Lumen Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonica Brasil and Lumen Technologies.
Diversification Opportunities for Telefonica Brasil and Lumen Technologies
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Telefonica and Lumen is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Telefonica Brasil SA and Lumen Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumen Technologies and Telefonica Brasil 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 Brasil SA 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 Brasil i.e., Telefonica Brasil and Lumen Technologies go up and down completely randomly.
Pair Corralation between Telefonica Brasil and Lumen Technologies
Considering the 90-day investment horizon Telefonica Brasil SA is expected to generate 0.37 times more return on investment than Lumen Technologies. However, Telefonica Brasil SA is 2.72 times less risky than Lumen Technologies. It trades about 0.5 of its potential returns per unit of risk. Lumen Technologies is currently generating about -0.22 per unit of risk. If you would invest 806.00 in Telefonica Brasil SA on November 18, 2024 and sell it today you would earn a total of 134.00 from holding Telefonica Brasil SA or generate 16.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telefonica Brasil SA vs. Lumen Technologies
Performance |
| Timeline |
| Telefonica Brasil |
| Lumen Technologies |
Telefonica Brasil and Lumen Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonica Brasil and Lumen Technologies
The main advantage of trading using opposite Telefonica Brasil and Lumen Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonica Brasil 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 Brasil vs. Vodafone Group PLC | Telefonica Brasil vs. Grupo Televisa SAB | Telefonica Brasil vs. America Movil SAB | Telefonica Brasil vs. Telefonica SA ADR |
| 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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