Correlation Between Telecom Italia and Metso Outotec
Can any of the company-specific risk be diversified away by investing in both Telecom Italia and Metso Outotec 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 Metso Outotec 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 Metso Outotec Corp, you can compare the effects of market volatilities on Telecom Italia and Metso Outotec 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 Metso Outotec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telecom Italia and Metso Outotec.
Diversification Opportunities for Telecom Italia and Metso Outotec
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Telecom and Metso is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Italia SpA and Metso Outotec Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metso Outotec 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 Metso Outotec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metso Outotec Corp has no effect on the direction of Telecom Italia i.e., Telecom Italia and Metso Outotec go up and down completely randomly.
Pair Corralation between Telecom Italia and Metso Outotec
Assuming the 90 days trading horizon Telecom Italia SpA is expected to generate 1.1 times more return on investment than Metso Outotec. However, Telecom Italia is 1.1 times more volatile than Metso Outotec Corp. It trades about 0.04 of its potential returns per unit of risk. Metso Outotec Corp is currently generating about 0.04 per unit of risk. If you would invest 27.00 in Telecom Italia SpA on September 12, 2024 and sell it today you would earn a total of 1.00 from holding Telecom Italia SpA or generate 3.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Telecom Italia SpA vs. Metso Outotec Corp
Performance |
| Timeline |
| Telecom Italia SpA |
| Metso Outotec Corp |
Telecom Italia and Metso Outotec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telecom Italia and Metso Outotec
The main advantage of trading using opposite Telecom Italia and Metso Outotec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telecom Italia position performs unexpectedly, Metso Outotec 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 Metso Outotec will offset losses from the drop in Metso Outotec's long position.| Telecom Italia vs. Monster Beverage Corp | Telecom Italia vs. Addtech | Telecom Italia vs. Fevertree Drinks Plc | Telecom Italia vs. Impax Asset Management |
| Metso Outotec vs. Pfeiffer Vacuum Technology | Metso Outotec vs. X FAB Silicon Foundries | Metso Outotec vs. Fulcrum Metals PLC | Metso Outotec vs. Future Metals NL |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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