Correlation Between Givaudan and Telecom Italia
Can any of the company-specific risk be diversified away by investing in both Givaudan 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 Givaudan and Telecom Italia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Givaudan SA and Telecom Italia SpA, you can compare the effects of market volatilities on Givaudan 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 Givaudan with a short position of Telecom Italia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Givaudan and Telecom Italia.
Diversification Opportunities for Givaudan and Telecom Italia
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Givaudan and Telecom is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Givaudan SA 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 Givaudan 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 Givaudan SA 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 Givaudan i.e., Givaudan and Telecom Italia go up and down completely randomly.
Pair Corralation between Givaudan and Telecom Italia
Assuming the 90 days trading horizon Givaudan is expected to generate 2.1 times less return on investment than Telecom Italia. But when comparing it to its historical volatility, Givaudan SA is 2.76 times less risky than Telecom Italia. It trades about 0.04 of its potential returns per unit of risk. Telecom Italia SpA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 28.00 in Telecom Italia SpA on November 3, 2024 and sell it today you would earn a total of 3.00 from holding Telecom Italia SpA or generate 10.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Givaudan SA vs. Telecom Italia SpA
Performance |
| Timeline |
| Givaudan SA |
| Telecom Italia SpA |
Givaudan and Telecom Italia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Givaudan and Telecom Italia
The main advantage of trading using opposite Givaudan and Telecom Italia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Givaudan 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.| Givaudan vs. Orient Telecoms | Givaudan vs. Clean Power Hydrogen | Givaudan vs. Telecom Italia SpA | Givaudan vs. Abingdon Health Plc |
| Telecom Italia vs. Alfa Financial Software | Telecom Italia vs. Mobile Tornado Group | Telecom Italia vs. Gamma Communications PLC | Telecom Italia vs. Spirent Communications plc |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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