Correlation Between Metso Outotec and Telecom Italia
Can any of the company-specific risk be diversified away by investing in both Metso Outotec 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 Metso Outotec and Telecom Italia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metso Outotec Corp and Telecom Italia SpA, you can compare the effects of market volatilities on Metso Outotec 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 Metso Outotec with a short position of Telecom Italia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metso Outotec and Telecom Italia.
Diversification Opportunities for Metso Outotec and Telecom Italia
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Metso and Telecom is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Metso Outotec Corp 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 Metso Outotec 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 Metso Outotec Corp 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 Metso Outotec i.e., Metso Outotec and Telecom Italia go up and down completely randomly.
Pair Corralation between Metso Outotec and Telecom Italia
Assuming the 90 days trading horizon Metso Outotec Corp is expected to under-perform the Telecom Italia. But the stock apears to be less risky and, when comparing its historical volatility, Metso Outotec Corp is 1.16 times less risky than Telecom Italia. The stock trades about -0.04 of its potential returns per unit of risk. The Telecom Italia SpA is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 26.00 in Telecom Italia SpA on September 12, 2024 and sell it today you would earn a total of 2.00 from holding Telecom Italia SpA or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Metso Outotec Corp vs. Telecom Italia SpA
Performance |
| Timeline |
| Metso Outotec Corp |
| Telecom Italia SpA |
Metso Outotec and Telecom Italia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metso Outotec and Telecom Italia
The main advantage of trading using opposite Metso Outotec and Telecom Italia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metso Outotec 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.| Metso Outotec vs. Pfeiffer Vacuum Technology | Metso Outotec vs. X FAB Silicon Foundries | Metso Outotec vs. Fulcrum Metals PLC | Metso Outotec vs. Future Metals NL |
| Telecom Italia vs. Hong Kong Land | Telecom Italia vs. Neometals | Telecom Italia vs. Coor Service Management | Telecom Italia vs. Fidelity Sustainable USD |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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