Correlation Between Verizon Communications and Telefonica Brasil
Can any of the company-specific risk be diversified away by investing in both Verizon Communications and Telefonica Brasil 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 Verizon Communications and Telefonica Brasil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and Telefonica Brasil SA, you can compare the effects of market volatilities on Verizon Communications and Telefonica Brasil 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 Verizon Communications with a short position of Telefonica Brasil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verizon Communications and Telefonica Brasil.
Diversification Opportunities for Verizon Communications and Telefonica Brasil
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Verizon and Telefonica is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and Telefonica Brasil SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefonica Brasil and Verizon Communications 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 Verizon Communications are associated (or correlated) with Telefonica Brasil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telefonica Brasil has no effect on the direction of Verizon Communications i.e., Verizon Communications and Telefonica Brasil go up and down completely randomly.
Pair Corralation between Verizon Communications and Telefonica Brasil
Allowing for the 90-day total investment horizon Verizon Communications is expected to generate 0.92 times more return on investment than Telefonica Brasil. However, Verizon Communications is 1.08 times less risky than Telefonica Brasil. It trades about 0.06 of its potential returns per unit of risk. Telefonica Brasil SA is currently generating about -0.1 per unit of risk. If you would invest 4,058 in Verizon Communications on August 23, 2024 and sell it today you would earn a total of 192.00 from holding Verizon Communications or generate 4.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verizon Communications vs. Telefonica Brasil SA
Performance |
| Timeline |
| Verizon Communications |
| Telefonica Brasil |
Verizon Communications and Telefonica Brasil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Verizon Communications and Telefonica Brasil
The main advantage of trading using opposite Verizon Communications and Telefonica Brasil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verizon Communications position performs unexpectedly, Telefonica Brasil 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 Brasil will offset losses from the drop in Telefonica Brasil's long position.| Verizon Communications vs. T Mobile | Verizon Communications vs. Lumen Technologies | Verizon Communications vs. Comcast Corp | Verizon Communications vs. ATT Inc |
| Telefonica Brasil vs. Orange SA ADR | Telefonica Brasil vs. Vodafone Group PLC | Telefonica Brasil vs. Grupo Televisa SAB | Telefonica Brasil vs. America Movil 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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