Correlation Between Telecom Italia and Premier Foods
Can any of the company-specific risk be diversified away by investing in both Telecom Italia and Premier Foods 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 Premier Foods 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 Premier Foods PLC, you can compare the effects of market volatilities on Telecom Italia and Premier Foods 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 Premier Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telecom Italia and Premier Foods.
Diversification Opportunities for Telecom Italia and Premier Foods
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Telecom and Premier is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Italia SpA and Premier Foods PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Foods 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 Premier Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Foods PLC has no effect on the direction of Telecom Italia i.e., Telecom Italia and Premier Foods go up and down completely randomly.
Pair Corralation between Telecom Italia and Premier Foods
Assuming the 90 days trading horizon Telecom Italia is expected to generate 4.47 times less return on investment than Premier Foods. In addition to that, Telecom Italia is 2.4 times more volatile than Premier Foods PLC. It trades about 0.01 of its total potential returns per unit of risk. Premier Foods PLC is currently generating about 0.13 per unit of volatility. If you would invest 12,923 in Premier Foods PLC on September 3, 2024 and sell it today you would earn a total of 6,457 from holding Premier Foods PLC or generate 49.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telecom Italia SpA vs. Premier Foods PLC
Performance |
| Timeline |
| Telecom Italia SpA |
| Premier Foods PLC |
Telecom Italia and Premier Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telecom Italia and Premier Foods
The main advantage of trading using opposite Telecom Italia and Premier Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telecom Italia position performs unexpectedly, Premier Foods 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 Premier Foods will offset losses from the drop in Premier Foods' long position.| Telecom Italia vs. Auto Trader Group | Telecom Italia vs. UNIQA Insurance Group | Telecom Italia vs. GoldMining | Telecom Italia vs. Indutrade AB |
| Premier Foods vs. National Atomic Co | Premier Foods vs. Flutter Entertainment PLC | Premier Foods vs. Camellia Plc | Premier Foods vs. Marwyn Value Investors |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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