Correlation Between Williams Sonoma and Telekom Austria

Can any of the company-specific risk be diversified away by investing in both Williams Sonoma and Telekom Austria 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 Williams Sonoma and Telekom Austria into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Williams Sonoma and Telekom Austria AG, you can compare the effects of market volatilities on Williams Sonoma and Telekom Austria 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 Williams Sonoma with a short position of Telekom Austria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Williams Sonoma and Telekom Austria.

Diversification Opportunities for Williams Sonoma and Telekom Austria

-0.46

Correlation Coefficient

Williams Sonoma  Telekom Austria

Very good diversification

The 3 months correlation between Williams and Telekom is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Williams Sonoma and Telekom Austria AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telekom Austria AG and Williams Sonoma 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 Williams Sonoma are associated (or correlated) with Telekom Austria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telekom Austria AG has no effect on the direction of Williams Sonoma i.e., Williams Sonoma and Telekom Austria go up and down completely randomly.

Pair Corralation between Williams Sonoma and Telekom Austria

Assuming the 90 days trading horizon Williams Sonoma is expected to under-perform the Telekom Austria. In addition to that, Williams Sonoma is 2.79 times more volatile than Telekom Austria AG. It trades about -0.2 of its total potential returns per unit of risk. Telekom Austria AG is currently generating about 0.34 per unit of volatility. If you would invest  771.00  in Telekom Austria AG on February 2, 2024 and sell it today you would earn a total of  30.00  from holding Telekom Austria AG or generate 3.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Williams Sonoma  vs.  Telekom Austria AG

Williams Sonoma

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Williams Sonoma are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Williams Sonoma unveiled solid returns over the last few months and may actually be approaching a breakup point.

Telekom Austria AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telekom Austria AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Telekom Austria is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Williams Sonoma and Telekom Austria

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

The idea behind Williams Sonoma and Telekom Austria AG 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.