Correlation Between ATT and Telefonica
Can any of the company-specific risk be diversified away by investing in both ATT and Telefonica 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 ATT and Telefonica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and Telefonica SA ADR, you can compare the effects of market volatilities on ATT and Telefonica 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 ATT with a short position of Telefonica. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Telefonica.
Diversification Opportunities for ATT and Telefonica
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ATT and Telefonica is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Telefonica SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefonica SA ADR and ATT 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 ATT Inc are associated (or correlated) with Telefonica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telefonica SA ADR has no effect on the direction of ATT i.e., ATT and Telefonica go up and down completely randomly.
Pair Corralation between ATT and Telefonica
Taking into account the 90-day investment horizon ATT Inc is expected to under-perform the Telefonica. In addition to that, ATT is 1.09 times more volatile than Telefonica SA ADR. It trades about -0.19 of its total potential returns per unit of risk. Telefonica SA ADR is currently generating about -0.07 per unit of volatility. If you would invest 428.00 in Telefonica SA ADR on January 20, 2024 and sell it today you would lose (6.00) from holding Telefonica SA ADR or give up 1.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
ATT Inc vs. Telefonica SA ADR
Performance |
| Timeline |
| ATT Inc |
| Telefonica SA ADR |
ATT and Telefonica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and Telefonica
The main advantage of trading using opposite ATT and Telefonica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, Telefonica 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 will offset losses from the drop in Telefonica's long position.| ATT vs. Grab Holdings | ATT vs. Cadence Design Systems | ATT vs. Aquagold International | ATT vs. Thrivent High Yield |
| Telefonica vs. Grab Holdings | Telefonica vs. Cadence Design Systems | Telefonica vs. Aquagold International | Telefonica vs. Thrivent High Yield |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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