Correlation Between Telecom Italia and Bank of Georgia
Can any of the company-specific risk be diversified away by investing in both Telecom Italia and Bank of Georgia 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 Bank of Georgia 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 Bank of Georgia, you can compare the effects of market volatilities on Telecom Italia and Bank of Georgia 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 Bank of Georgia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telecom Italia and Bank of Georgia.
Diversification Opportunities for Telecom Italia and Bank of Georgia
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telecom and Bank is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Italia SpA and Bank of Georgia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Georgia 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 Bank of Georgia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Georgia has no effect on the direction of Telecom Italia i.e., Telecom Italia and Bank of Georgia go up and down completely randomly.
Pair Corralation between Telecom Italia and Bank of Georgia
Assuming the 90 days trading horizon Telecom Italia is expected to generate 1.56 times less return on investment than Bank of Georgia. In addition to that, Telecom Italia is 1.3 times more volatile than Bank of Georgia. It trades about 0.04 of its total potential returns per unit of risk. Bank of Georgia is currently generating about 0.08 per unit of volatility. If you would invest 225,287 in Bank of Georgia on September 14, 2024 and sell it today you would earn a total of 238,213 from holding Bank of Georgia or generate 105.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telecom Italia SpA vs. Bank of Georgia
Performance |
| Timeline |
| Telecom Italia SpA |
| Bank of Georgia |
Telecom Italia and Bank of Georgia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telecom Italia and Bank of Georgia
The main advantage of trading using opposite Telecom Italia and Bank of Georgia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telecom Italia position performs unexpectedly, Bank of Georgia 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 Bank of Georgia will offset losses from the drop in Bank of Georgia's long position.| Telecom Italia vs. Wheaton Precious Metals | Telecom Italia vs. Amedeo Air Four | Telecom Italia vs. Darden Restaurants | Telecom Italia vs. Porvair plc |
| Bank of Georgia vs. Telecom Italia SpA | Bank of Georgia vs. Spirent Communications plc | Bank of Georgia vs. Aeorema Communications Plc | Bank of Georgia vs. Cairo Communication SpA |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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