Correlation Between Sydbank and Telecom Italia
Can any of the company-specific risk be diversified away by investing in both Sydbank and Telecom Italia 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 Sydbank and Telecom Italia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sydbank and Telecom Italia SpA, you can compare the effects of market volatilities on Sydbank and Telecom Italia 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 Sydbank with a short position of Telecom Italia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sydbank and Telecom Italia.
Diversification Opportunities for Sydbank and Telecom Italia
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sydbank and Telecom is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Sydbank and Telecom Italia SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecom Italia SpA and Sydbank 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 Sydbank are associated (or correlated) with Telecom Italia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telecom Italia SpA has no effect on the direction of Sydbank i.e., Sydbank and Telecom Italia go up and down completely randomly.
Pair Corralation between Sydbank and Telecom Italia
Assuming the 90 days trading horizon Sydbank is expected to under-perform the Telecom Italia. In addition to that, Sydbank is 1.12 times more volatile than Telecom Italia SpA. It trades about -0.03 of its total potential returns per unit of risk. Telecom Italia SpA is currently generating about 0.22 per unit of volatility. If you would invest 29.00 in Telecom Italia SpA on November 7, 2024 and sell it today you would earn a total of 2.00 from holding Telecom Italia SpA or generate 6.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sydbank vs. Telecom Italia SpA
Performance |
| Timeline |
| Sydbank |
| Telecom Italia SpA |
Sydbank and Telecom Italia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sydbank and Telecom Italia
The main advantage of trading using opposite Sydbank and Telecom Italia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sydbank position performs unexpectedly, Telecom Italia 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 Telecom Italia will offset losses from the drop in Telecom Italia's long position.| Sydbank vs. Samsung Electronics Co | Sydbank vs. Samsung Electronics Co | Sydbank vs. Toyota Motor Corp | Sydbank vs. Reliance Industries Ltd |
| Telecom Italia vs. American Homes 4 | Telecom Italia vs. Synthomer plc | Telecom Italia vs. United Internet AG | Telecom Italia vs. UNIQA Insurance Group |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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