Correlation Between Telefonica and Anterix

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

Diversification Opportunities for Telefonica and Anterix

0.57

Correlation Coefficient

Telefonica  Anterix

Very weak diversification

The 3 months correlation between Telefonica and Anterix is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Telefonica SA ADR and Anterix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anterix 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 Anterix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anterix has no effect on the direction of Telefonica i.e., Telefonica and Anterix go up and down completely randomly.

Pair Corralation between Telefonica and Anterix

Considering the 90-day investment horizon Telefonica SA ADR is expected to under-perform the Anterix. But the stock apears to be less risky and, when comparing its historical volatility, Telefonica SA ADR is 2.04 times less risky than Anterix. The stock trades about -0.22 of its potential returns per unit of risk. The Anterix is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  3,260  in Anterix on October 14, 2024 and sell it today you would lose (380.00) from holding Anterix or give up 11.66% of portfolio value over 90 days.

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

Telefonica SA ADR  vs.  Anterix

Telefonica SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telefonica SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Anterix

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anterix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Telefonica and Anterix

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

The idea behind Telefonica SA ADR and Anterix 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 Global Correlations module to find global opportunities by holding instruments from different markets.