Correlation Between Telecom Italia and Newmont Corp
Can any of the company-specific risk be diversified away by investing in both Telecom Italia and Newmont Corp 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 Newmont Corp 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 Newmont Corp, you can compare the effects of market volatilities on Telecom Italia and Newmont Corp 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 Newmont Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telecom Italia and Newmont Corp.
Diversification Opportunities for Telecom Italia and Newmont Corp
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telecom and Newmont is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Italia SpA and Newmont Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont 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 Newmont Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmont Corp has no effect on the direction of Telecom Italia i.e., Telecom Italia and Newmont Corp go up and down completely randomly.
Pair Corralation between Telecom Italia and Newmont Corp
Assuming the 90 days trading horizon Telecom Italia SpA is expected to generate 1.09 times more return on investment than Newmont Corp. However, Telecom Italia is 1.09 times more volatile than Newmont Corp. It trades about 0.14 of its potential returns per unit of risk. Newmont Corp is currently generating about -0.03 per unit of risk. If you would invest 27.00 in Telecom Italia SpA on October 30, 2024 and sell it today you would earn a total of 3.00 from holding Telecom Italia SpA or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telecom Italia SpA vs. Newmont Corp
Performance |
| Timeline |
| Telecom Italia SpA |
| Newmont Corp |
Telecom Italia and Newmont Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telecom Italia and Newmont Corp
The main advantage of trading using opposite Telecom Italia and Newmont Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telecom Italia position performs unexpectedly, Newmont Corp 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 Newmont Corp will offset losses from the drop in Newmont Corp's long position.| Telecom Italia vs. Sydbank | Telecom Italia vs. Baker Steel Resources | Telecom Italia vs. Cembra Money Bank | Telecom Italia vs. United States Steel |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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