Correlation Between Telefonica Brasil and Telefonica
Can any of the company-specific risk be diversified away by investing in both Telefonica Brasil and Telefonica 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 Telefonica 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 Telefonica SA ADR, you can compare the effects of market volatilities on Telefonica Brasil and Telefonica 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 Telefonica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonica Brasil and Telefonica.
Diversification Opportunities for Telefonica Brasil and Telefonica
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Telefonica and Telefonica is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Telefonica Brasil SA and Telefonica SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefonica SA ADR 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 Telefonica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telefonica SA ADR has no effect on the direction of Telefonica Brasil i.e., Telefonica Brasil and Telefonica go up and down completely randomly.
Pair Corralation between Telefonica Brasil and Telefonica
Considering the 90-day investment horizon Telefonica Brasil SA is expected to generate 1.31 times more return on investment than Telefonica. However, Telefonica Brasil is 1.31 times more volatile than Telefonica SA ADR. It trades about 0.5 of its potential returns per unit of risk. Telefonica SA ADR is currently generating about 0.26 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telefonica Brasil SA vs. Telefonica SA ADR
Performance |
| Timeline |
| Telefonica Brasil |
| Telefonica SA ADR |
Telefonica Brasil and Telefonica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonica Brasil and Telefonica
The main advantage of trading using opposite Telefonica Brasil and Telefonica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonica Brasil position performs unexpectedly, Telefonica 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 Telefonica will offset losses from the drop in Telefonica's 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 |
| Telefonica vs. SK Telecom Co | Telefonica vs. America Movil SAB | Telefonica vs. KT Corporation | Telefonica vs. Telefonica Brasil SA |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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