Correlation Between Cembra Money and Telecom Italia
Can any of the company-specific risk be diversified away by investing in both Cembra Money 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 Cembra Money and Telecom Italia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cembra Money Bank and Telecom Italia SpA, you can compare the effects of market volatilities on Cembra Money 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 Cembra Money with a short position of Telecom Italia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cembra Money and Telecom Italia.
Diversification Opportunities for Cembra Money and Telecom Italia
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cembra and Telecom is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Cembra Money Bank 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 Cembra Money 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 Cembra Money Bank 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 Cembra Money i.e., Cembra Money and Telecom Italia go up and down completely randomly.
Pair Corralation between Cembra Money and Telecom Italia
Assuming the 90 days trading horizon Cembra Money Bank is expected to generate 0.53 times more return on investment than Telecom Italia. However, Cembra Money Bank is 1.9 times less risky than Telecom Italia. It trades about 0.41 of its potential returns per unit of risk. Telecom Italia SpA is currently generating about 0.22 per unit of risk. If you would invest 8,396 in Cembra Money Bank on November 7, 2024 and sell it today you would earn a total of 572.00 from holding Cembra Money Bank or generate 6.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Cembra Money Bank vs. Telecom Italia SpA
Performance |
| Timeline |
| Cembra Money Bank |
| Telecom Italia SpA |
Cembra Money and Telecom Italia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cembra Money and Telecom Italia
The main advantage of trading using opposite Cembra Money and Telecom Italia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cembra Money 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.| Cembra Money vs. Central Asia Metals | Cembra Money vs. URU Metals | Cembra Money vs. Wheaton Precious Metals | Cembra Money vs. Empire Metals Limited |
| 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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