Correlation Between Iberdrola and Cellnex Telecom

Can any of the company-specific risk be diversified away by investing in both Iberdrola and Cellnex Telecom 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 Iberdrola and Cellnex Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Iberdrola SA and Cellnex Telecom SA, you can compare the effects of market volatilities on Iberdrola and Cellnex Telecom 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 Iberdrola with a short position of Cellnex Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iberdrola and Cellnex Telecom.

Diversification Opportunities for Iberdrola and Cellnex Telecom

-0.24

Correlation Coefficient

Iberdrola  Cellnex Telecom

Very good diversification

The 3 months correlation between Iberdrola and Cellnex is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Iberdrola SA and Cellnex Telecom SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cellnex Telecom SA and Iberdrola 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 Iberdrola SA are associated (or correlated) with Cellnex Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cellnex Telecom SA has no effect on the direction of Iberdrola i.e., Iberdrola and Cellnex Telecom go up and down completely randomly.

Pair Corralation between Iberdrola and Cellnex Telecom

Assuming the 90 days trading horizon Iberdrola SA is expected to generate 0.91 times more return on investment than Cellnex Telecom. However, Iberdrola SA is 1.09 times less risky than Cellnex Telecom. It trades about 0.01 of its potential returns per unit of risk. Cellnex Telecom SA is currently generating about -0.05 per unit of risk. If you would invest  1,507  in Iberdrola SA on April 25, 2025 and sell it today you would earn a total of  8.00  from holding Iberdrola SA or generate 0.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Iberdrola SA  vs.  Cellnex Telecom SA

Iberdrola SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Iberdrola SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Iberdrola is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Cellnex Telecom SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cellnex Telecom SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Cellnex Telecom is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Iberdrola and Cellnex Telecom

The main advantage of trading using opposite Iberdrola and Cellnex Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iberdrola position performs unexpectedly, Cellnex Telecom 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 Cellnex Telecom will offset losses from the drop in Cellnex Telecom's long position.

The idea behind Iberdrola SA and Cellnex Telecom SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.