Correlation Between Telus Corp and Telefonica Brasil

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

By analyzing existing cross correlation between Telus Corp and Telefonica Brasil SA, you can compare the effects of market volatilities on Telus Corp and Telefonica 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 Telus Corp with a short position of Telefonica Brasil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telus Corp and Telefonica Brasil.

Diversification Opportunities for Telus Corp and Telefonica Brasil

0.89

Correlation Coefficient

Telus Corp  Telefonica Brasil

Very poor diversification

The 3 months correlation between Telus and Telefonica is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Telus Corp and Telefonica Brasil SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefonica Brasil and Telus Corp 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 Telus Corp are associated (or correlated) with Telefonica Brasil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telefonica Brasil has no effect on the direction of Telus Corp i.e., Telus Corp and Telefonica Brasil go up and down completely randomly.

Pair Corralation between Telus Corp and Telefonica Brasil

Allowing for the 90-day total investment horizon Telus Corp is expected to under-perform the Telefonica Brasil. But the stock apears to be less risky and, when comparing its historical volatility, Telus Corp is 1.76 times less risky than Telefonica Brasil. The stock trades about -0.15 of its potential returns per unit of risk. The Telefonica Brasil SA is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  945.00  in Telefonica Brasil SA on October 26, 2024 and sell it today you would lose (92.00) from holding Telefonica Brasil SA or give up 9.74% of portfolio value over 90 days.

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

Telus Corp  vs.  Telefonica Brasil SA

Telus Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Telefonica Brasil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telefonica Brasil SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's forward indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Telus Corp and Telefonica Brasil

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

The idea behind Telus Corp and Telefonica 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.