Correlation Between Telefonica Brasil and Telecom Italia
Can any of the company-specific risk be diversified away by investing in both Telefonica Brasil and Telecom Italia 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 Telecom Italia 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 Telecom Italia SpA, you can compare the effects of market volatilities on Telefonica Brasil and Telecom Italia 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 Telecom Italia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonica Brasil and Telecom Italia.
Diversification Opportunities for Telefonica Brasil and Telecom Italia
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Telefonica and Telecom is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Telefonica Brasil SA and Telecom Italia SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecom Italia SpA 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 Telecom Italia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telecom Italia SpA has no effect on the direction of Telefonica Brasil i.e., Telefonica Brasil and Telecom Italia go up and down completely randomly.
Pair Corralation between Telefonica Brasil and Telecom Italia
If you would invest 327.00 in Telecom Italia SpA on August 27, 2024 and sell it today you would earn a total of 0.00 from holding Telecom Italia SpA or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 2.33% |
| Values | Daily Returns |
Telefonica Brasil SA vs. Telecom Italia SpA
Performance |
| Timeline |
| Telefonica Brasil |
| Telecom Italia SpA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Telefonica Brasil and Telecom Italia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonica Brasil and Telecom Italia
The main advantage of trading using opposite Telefonica Brasil and Telecom Italia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonica Brasil position performs unexpectedly, Telecom Italia 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 Telecom Italia will offset losses from the drop in Telecom Italia's long position.| Telefonica Brasil vs. Orange SA ADR | Telefonica Brasil vs. Vodafone Group PLC | Telefonica Brasil vs. Grupo Televisa SAB | Telefonica Brasil vs. America Movil SAB |
| Telecom Italia vs. Telefonica Brasil SA | Telecom Italia vs. Orange SA ADR | Telecom Italia vs. Vodafone Group PLC | Telecom Italia vs. Grupo Televisa SAB |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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