Correlation Between Telefonica and Comcast Holdings

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

Diversification Opportunities for Telefonica and Comcast Holdings

-0.51

Correlation Coefficient

Telefonica  Comcast Holdings

Excellent diversification

The 3 months correlation between Telefonica and Comcast is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Telefonica SA ADR and Comcast Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comcast Holdings Corp 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 Comcast Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comcast Holdings Corp has no effect on the direction of Telefonica i.e., Telefonica and Comcast Holdings go up and down completely randomly.

Pair Corralation between Telefonica and Comcast Holdings

Considering the 90-day investment horizon Telefonica SA ADR is expected to under-perform the Comcast Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Telefonica SA ADR is 189.5 times less risky than Comcast Holdings. The stock trades about 0.0 of its potential returns per unit of risk. The Comcast Holdings Corp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  5,849  in Comcast Holdings Corp on September 29, 2024 and sell it today you would earn a total of  258.00  from holding Comcast Holdings Corp or generate 4.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	60.32%
Values	Daily Returns

Telefonica SA ADR  vs.  Comcast Holdings Corp

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 weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Comcast Holdings Corp

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Comcast Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Comcast Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Telefonica and Comcast Holdings

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

The idea behind Telefonica SA ADR and Comcast Holdings Corp 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.