Correlation Between Telefonica Brasil and International Business
Can any of the company-specific risk be diversified away by investing in both Telefonica Brasil and International Business 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 International Business 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 International Business Machines, you can compare the effects of market volatilities on Telefonica Brasil and International Business 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 International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonica Brasil and International Business.
Diversification Opportunities for Telefonica Brasil and International Business
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Telefonica and International is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Telefonica Brasil SA and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business 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 International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of Telefonica Brasil i.e., Telefonica Brasil and International Business go up and down completely randomly.
Pair Corralation between Telefonica Brasil and International Business
Considering the 90-day investment horizon Telefonica Brasil SA is expected to under-perform the International Business. In addition to that, Telefonica Brasil is 1.43 times more volatile than International Business Machines. It trades about -0.26 of its total potential returns per unit of risk. International Business Machines is currently generating about -0.34 per unit of volatility. If you would invest 19,396 in International Business Machines on January 20, 2024 and sell it today you would lose (1,249) from holding International Business Machines or give up 6.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Telefonica Brasil SA vs. International Business Machine
Performance |
| Timeline |
| Telefonica Brasil |
| International Business |
Telefonica Brasil and International Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonica Brasil and International Business
The main advantage of trading using opposite Telefonica Brasil and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonica Brasil position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.| Telefonica Brasil vs. Grab Holdings | Telefonica Brasil vs. Cadence Design Systems | Telefonica Brasil vs. Aquagold International | Telefonica Brasil vs. Thrivent High Yield |
| International Business vs. Information Services Group | International Business vs. Home Bancorp | International Business vs. CRA International | International Business vs. Aquagold International |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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