Correlation Between ATT and Telefnica Brasil

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

By analyzing existing cross correlation between ATT Inc and Telefnica Brasil SA, you can compare the effects of market volatilities on ATT and Telefnica Brasil 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 Telefnica Brasil. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Telefnica Brasil.

Diversification Opportunities for ATT and Telefnica Brasil

-0.76

Correlation Coefficient

ATT  Telefnica Brasil

Pay attention - limited upside

The 3 months correlation between ATT and Telefnica is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Telefnica Brasil SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefnica Brasil 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 Telefnica Brasil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telefnica Brasil has no effect on the direction of ATT i.e., ATT and Telefnica Brasil go up and down completely randomly.

Pair Corralation between ATT and Telefnica Brasil

Assuming the 90 days trading horizon ATT Inc is expected to generate 1.02 times more return on investment than Telefnica Brasil. However, ATT is 1.02 times more volatile than Telefnica Brasil SA. It trades about 0.33 of its potential returns per unit of risk. Telefnica Brasil SA is currently generating about -0.41 per unit of risk. If you would invest  2,841  in ATT Inc on March 4, 2024 and sell it today you would earn a total of  350.00  from holding ATT Inc or generate 12.32% return on investment over 90 days.

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

ATT Inc  vs.  Telefnica Brasil SA

ATT Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, ATT sustained solid returns over the last few months and may actually be approaching a breakup point.

Telefnica Brasil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telefnica 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 basic indicators remain comparatively stable which may send shares a bit higher in July 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with ATT and Telefnica Brasil

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

The idea behind ATT Inc and Telefnica Brasil 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.