Correlation Between Telefonica Brasil and Rogers Communications

Can any of the company-specific risk be diversified away by investing in both Telefonica Brasil and Rogers Communications 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 Rogers Communications 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 Rogers Communications, you can compare the effects of market volatilities on Telefonica Brasil and Rogers Communications 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 Rogers Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonica Brasil and Rogers Communications.

Diversification Opportunities for Telefonica Brasil and Rogers Communications

0.82

Correlation Coefficient

Telefonica Brasil  Rogers Communications

Very poor diversification

The 3 months correlation between Telefonica and Rogers is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Telefonica Brasil SA and Rogers Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rogers Communications 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 Rogers Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rogers Communications has no effect on the direction of Telefonica Brasil i.e., Telefonica Brasil and Rogers Communications go up and down completely randomly.

Pair Corralation between Telefonica Brasil and Rogers Communications

Considering the 90-day investment horizon Telefonica Brasil SA is expected to under-perform the Rogers Communications. In addition to that, Telefonica Brasil is 1.5 times more volatile than Rogers Communications. It trades about -0.12 of its total potential returns per unit of risk. Rogers Communications is currently generating about -0.16 per unit of volatility. If you would invest  4,515  in Rogers Communications on February 18, 2024 and sell it today you would lose (528.00) from holding Rogers Communications or give up 11.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Telefonica Brasil SA  vs.  Rogers Communications

Telefonica Brasil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telefonica Brasil SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward indicators remain fairly stable which may send shares a bit higher in June 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Rogers Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rogers Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Telefonica Brasil and Rogers Communications

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

The idea behind Telefonica Brasil SA and Rogers Communications 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.