Correlation Between Telefonica and Rogers Communications

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

Diversification Opportunities for Telefonica and Rogers Communications

0.58

Correlation Coefficient

Telefonica  Rogers Communications

Very weak diversification

The 3 months correlation between Telefonica and Rogers is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Telefonica SA ADR and Rogers Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rogers Communications 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 Rogers Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rogers Communications has no effect on the direction of Telefonica i.e., Telefonica and Rogers Communications go up and down completely randomly.

Pair Corralation between Telefonica and Rogers Communications

Considering the 90-day investment horizon Telefonica SA ADR is expected to generate 0.62 times more return on investment than Rogers Communications. However, Telefonica SA ADR is 1.6 times less risky than Rogers Communications. It trades about 0.02 of its potential returns per unit of risk. Rogers Communications is currently generating about -0.21 per unit of risk. If you would invest  433.00  in Telefonica SA ADR on November 28, 2024 and sell it today you would earn a total of  5.00  from holding Telefonica SA ADR or generate 1.15% return on investment over 90 days.

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

Telefonica SA ADR  vs.  Rogers Communications

Telefonica SA ADR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Telefonica SA ADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Telefonica is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Rogers Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rogers Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Telefonica and Rogers Communications

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

The idea behind Telefonica SA ADR and Rogers Communications 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.