Correlation Between Telefonica and VEON
Can any of the company-specific risk be diversified away by investing in both Telefonica and VEON 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 VEON 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 VEON, you can compare the effects of market volatilities on Telefonica and VEON 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 VEON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonica and VEON.
Diversification Opportunities for Telefonica and VEON
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Telefonica and VEON is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Telefonica SA ADR and VEON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VEON 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 VEON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VEON has no effect on the direction of Telefonica i.e., Telefonica and VEON go up and down completely randomly.
Pair Corralation between Telefonica and VEON
Considering the 90-day investment horizon Telefonica is expected to generate 1.75 times less return on investment than VEON. But when comparing it to its historical volatility, Telefonica SA ADR is 1.33 times less risky than VEON. It trades about 0.21 of its potential returns per unit of risk. VEON is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 2,275 in VEON on February 7, 2024 and sell it today you would earn a total of 205.00 from holding VEON or generate 9.01% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Telefonica SA ADR vs. VEON
Performance |
Timeline |
Telefonica SA ADR |
VEON |
Telefonica and VEON Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Telefonica and VEON
The main advantage of trading using opposite Telefonica and VEON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonica position performs unexpectedly, VEON 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 VEON will offset losses from the drop in VEON'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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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