Correlation Between Telecom Italia and Liberty Media
Can any of the company-specific risk be diversified away by investing in both Telecom Italia and Liberty Media 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 Liberty Media 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 Liberty Media Corp, you can compare the effects of market volatilities on Telecom Italia and Liberty Media 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 Liberty Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telecom Italia and Liberty Media.
Diversification Opportunities for Telecom Italia and Liberty Media
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Telecom and Liberty is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Italia SpA and Liberty Media Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Media Corp 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 Liberty Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Media Corp has no effect on the direction of Telecom Italia i.e., Telecom Italia and Liberty Media go up and down completely randomly.
Pair Corralation between Telecom Italia and Liberty Media
Assuming the 90 days trading horizon Telecom Italia SpA is expected to generate 1.41 times more return on investment than Liberty Media. However, Telecom Italia is 1.41 times more volatile than Liberty Media Corp. It trades about 0.22 of its potential returns per unit of risk. Liberty Media Corp is currently generating about 0.16 per unit of risk. If you would invest 29.00 in Telecom Italia SpA on November 7, 2024 and sell it today you would earn a total of 2.00 from holding Telecom Italia SpA or generate 6.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Telecom Italia SpA vs. Liberty Media Corp
Performance |
| Timeline |
| Telecom Italia SpA |
| Liberty Media Corp |
Telecom Italia and Liberty Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telecom Italia and Liberty Media
The main advantage of trading using opposite Telecom Italia and Liberty Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telecom Italia position performs unexpectedly, Liberty Media 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 Liberty Media will offset losses from the drop in Liberty Media's long position.| Telecom Italia vs. American Homes 4 | Telecom Italia vs. Synthomer plc | Telecom Italia vs. United Internet AG | Telecom Italia vs. UNIQA Insurance Group |
| Liberty Media vs. Diversified Energy | Liberty Media vs. Livermore Investments Group | Liberty Media vs. BlackRock Frontiers Investment | Liberty Media vs. Kinnevik Investment AB |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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