Correlation Between Telecom Italia and LBG Media
Can any of the company-specific risk be diversified away by investing in both Telecom Italia and LBG 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 LBG 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 LBG Media PLC, you can compare the effects of market volatilities on Telecom Italia and LBG 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 LBG Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telecom Italia and LBG Media.
Diversification Opportunities for Telecom Italia and LBG Media
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telecom and LBG is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Italia SpA and LBG Media PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LBG Media PLC 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 LBG Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LBG Media PLC has no effect on the direction of Telecom Italia i.e., Telecom Italia and LBG Media go up and down completely randomly.
Pair Corralation between Telecom Italia and LBG Media
Assuming the 90 days trading horizon Telecom Italia SpA is expected to generate 1.05 times more return on investment than LBG Media. However, Telecom Italia is 1.05 times more volatile than LBG Media PLC. It trades about 0.11 of its potential returns per unit of risk. LBG Media PLC is currently generating about -0.21 per unit of risk. If you would invest 29.00 in Telecom Italia SpA on October 28, 2024 and sell it today you would earn a total of 1.00 from holding Telecom Italia SpA or generate 3.45% 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. LBG Media PLC
Performance |
| Timeline |
| Telecom Italia SpA |
| LBG Media PLC |
Telecom Italia and LBG Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telecom Italia and LBG Media
The main advantage of trading using opposite Telecom Italia and LBG Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telecom Italia position performs unexpectedly, LBG 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 LBG Media will offset losses from the drop in LBG Media's long position.| Telecom Italia vs. Berkshire Hathaway | Telecom Italia vs. Samsung Electronics Co | Telecom Italia vs. Samsung Electronics Co | Telecom Italia vs. Chocoladefabriken Lindt Spruengli |
| LBG Media vs. Various Eateries PLC | LBG Media vs. Coeur Mining | LBG Media vs. Jacquet Metal Service | LBG Media vs. Lundin Mining Corp |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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