Correlation Between Telefonica and Airbus Group
Can any of the company-specific risk be diversified away by investing in both Telefonica and Airbus Group 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 Airbus Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telefonica and Airbus Group SE, you can compare the effects of market volatilities on Telefonica and Airbus Group 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 Airbus Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonica and Airbus Group.
Diversification Opportunities for Telefonica and Airbus Group
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Telefonica and Airbus is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Telefonica and Airbus Group SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbus Group SE 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 are associated (or correlated) with Airbus Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airbus Group SE has no effect on the direction of Telefonica i.e., Telefonica and Airbus Group go up and down completely randomly.
Pair Corralation between Telefonica and Airbus Group
Assuming the 90 days trading horizon Telefonica is expected to generate 0.73 times more return on investment than Airbus Group. However, Telefonica is 1.37 times less risky than Airbus Group. It trades about 0.16 of its potential returns per unit of risk. Airbus Group SE is currently generating about -0.22 per unit of risk. If you would invest 407.00 in Telefonica on February 1, 2024 and sell it today you would earn a total of 14.00 from holding Telefonica or generate 3.44% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Telefonica vs. Airbus Group SE
Performance |
Timeline |
Telefonica |
Airbus Group SE |
Telefonica and Airbus Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Telefonica and Airbus Group
The main advantage of trading using opposite Telefonica and Airbus Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonica position performs unexpectedly, Airbus Group 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 Airbus Group will offset losses from the drop in Airbus Group's long position.Telefonica vs. Grifols SA | Telefonica vs. Aena SA | Telefonica vs. ACS Actividades de | Telefonica vs. Ferrovial |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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