Correlation Between Telefonica Brasil and Major League

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

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

Diversification Opportunities for Telefonica Brasil and Major League

0.0

Correlation Coefficient

Telefonica Brasil  Major League

Pay attention - limited upside

The 3 months correlation between Telefonica and Major is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Telefonica Brasil SA and Major League Football in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Major League Football and Telefonica Brasil 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 Brasil SA are associated (or correlated) with Major League. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Major League Football has no effect on the direction of Telefonica Brasil i.e., Telefonica Brasil and Major League go up and down completely randomly.

Pair Corralation between Telefonica Brasil and Major League

If you would invest  765.00  in Telefonica Brasil SA on December 26, 2024 and sell it today you would earn a total of  109.00  from holding Telefonica Brasil SA or generate 14.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Telefonica Brasil SA  vs.  Major League Football

Telefonica Brasil

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Telefonica Brasil SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward indicators, Telefonica Brasil showed solid returns over the last few months and may actually be approaching a breakup point.

Major League Football

Risk-Adjusted Performance

Very Weak

Over the last 90 days Major League Football has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Major League is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Telefonica Brasil and Major League

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

The idea behind Telefonica Brasil SA and Major League Football 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.