Correlation Between Telefonica and Shenandoah Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both Telefonica and Shenandoah Telecommunicatio 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 and Shenandoah Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telefonica SA ADR and Shenandoah Telecommunications Co, you can compare the effects of market volatilities on Telefonica and Shenandoah Telecommunicatio 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 with a short position of Shenandoah Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonica and Shenandoah Telecommunicatio.
Diversification Opportunities for Telefonica and Shenandoah Telecommunicatio
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Telefonica and Shenandoah is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Telefonica SA ADR and Shenandoah Telecommunications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenandoah Telecommunicatio and Telefonica 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 SA ADR are associated (or correlated) with Shenandoah Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenandoah Telecommunicatio has no effect on the direction of Telefonica i.e., Telefonica and Shenandoah Telecommunicatio go up and down completely randomly.
Pair Corralation between Telefonica and Shenandoah Telecommunicatio
Considering the 90-day investment horizon Telefonica SA ADR is expected to generate 0.48 times more return on investment than Shenandoah Telecommunicatio. However, Telefonica SA ADR is 2.07 times less risky than Shenandoah Telecommunicatio. It trades about 0.19 of its potential returns per unit of risk. Shenandoah Telecommunications Co is currently generating about -0.38 per unit of risk. If you would invest 434.00 in Telefonica SA ADR on February 4, 2024 and sell it today you would earn a total of 22.00 from holding Telefonica SA ADR or generate 5.07% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 95.65% |
Values | Daily Returns |
Telefonica SA ADR vs. Shenandoah Telecommunications
Performance |
Timeline |
Telefonica SA ADR |
Shenandoah Telecommunicatio |
Telefonica and Shenandoah Telecommunicatio Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Telefonica and Shenandoah Telecommunicatio
The main advantage of trading using opposite Telefonica and Shenandoah Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonica position performs unexpectedly, Shenandoah Telecommunicatio 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 Shenandoah Telecommunicatio will offset losses from the drop in Shenandoah Telecommunicatio's long position.Telefonica vs. T Mobile | Telefonica vs. Comcast Corp | Telefonica vs. Charter Communications | Telefonica vs. Vodafone Group PLC |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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