Correlation Between Telecom Italia and Humana
Can any of the company-specific risk be diversified away by investing in both Telecom Italia and Humana 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 Telecom Italia and Humana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telecom Italia SpA and Humana Inc, you can compare the effects of market volatilities on Telecom Italia and Humana 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 Telecom Italia with a short position of Humana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telecom Italia and Humana.
Diversification Opportunities for Telecom Italia and Humana
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telecom and Humana is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Italia SpA and Humana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humana Inc and Telecom Italia 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 Telecom Italia SpA are associated (or correlated) with Humana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humana Inc has no effect on the direction of Telecom Italia i.e., Telecom Italia and Humana go up and down completely randomly.
Pair Corralation between Telecom Italia and Humana
Assuming the 90 days trading horizon Telecom Italia SpA is expected to generate 1.32 times more return on investment than Humana. However, Telecom Italia is 1.32 times more volatile than Humana Inc. It trades about 0.04 of its potential returns per unit of risk. Humana Inc is currently generating about -0.04 per unit of risk. If you would invest 20.00 in Telecom Italia SpA on September 3, 2024 and sell it today you would earn a total of 7.00 from holding Telecom Italia SpA or generate 35.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.59% |
| Values | Daily Returns |
Telecom Italia SpA vs. Humana Inc
Performance |
| Timeline |
| Telecom Italia SpA |
| Humana Inc |
Telecom Italia and Humana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telecom Italia and Humana
The main advantage of trading using opposite Telecom Italia and Humana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telecom Italia position performs unexpectedly, Humana 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 Humana will offset losses from the drop in Humana's long position.| Telecom Italia vs. Auto Trader Group | Telecom Italia vs. UNIQA Insurance Group | Telecom Italia vs. GoldMining | Telecom Italia vs. Indutrade AB |
| Humana vs. PPHE Hotel Group | Humana vs. Martin Marietta Materials | Humana vs. Atalaya Mining | Humana vs. Wyndham Hotels Resorts |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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