Correlation Between REVO INSURANCE and TELECOM ITALIA
Can any of the company-specific risk be diversified away by investing in both REVO INSURANCE 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 REVO INSURANCE and TELECOM ITALIA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REVO INSURANCE SPA and TELECOM ITALIA, you can compare the effects of market volatilities on REVO INSURANCE 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 REVO INSURANCE with a short position of TELECOM ITALIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of REVO INSURANCE and TELECOM ITALIA.
Diversification Opportunities for REVO INSURANCE and TELECOM ITALIA
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between REVO and TELECOM is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding REVO INSURANCE SPA and TELECOM ITALIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TELECOM ITALIA and REVO INSURANCE 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 REVO INSURANCE SPA 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 has no effect on the direction of REVO INSURANCE i.e., REVO INSURANCE and TELECOM ITALIA go up and down completely randomly.
Pair Corralation between REVO INSURANCE and TELECOM ITALIA
Assuming the 90 days horizon REVO INSURANCE is expected to generate 8.19 times less return on investment than TELECOM ITALIA. But when comparing it to its historical volatility, REVO INSURANCE SPA is 1.94 times less risky than TELECOM ITALIA. It trades about 0.04 of its potential returns per unit of risk. TELECOM ITALIA is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 24.00 in TELECOM ITALIA on November 6, 2024 and sell it today you would earn a total of 2.00 from holding TELECOM ITALIA or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
REVO INSURANCE SPA vs. TELECOM ITALIA
Performance |
| Timeline |
| REVO INSURANCE SPA |
| TELECOM ITALIA |
REVO INSURANCE and TELECOM ITALIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REVO INSURANCE and TELECOM ITALIA
The main advantage of trading using opposite REVO INSURANCE and TELECOM ITALIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REVO INSURANCE 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.| REVO INSURANCE vs. Acadia Healthcare | REVO INSURANCE vs. Sims Metal Management | REVO INSURANCE vs. EPSILON HEALTHCARE LTD | REVO INSURANCE vs. Siamgas And Petrochemicals |
| TELECOM ITALIA vs. Sunny Optical Technology | TELECOM ITALIA vs. SOLSTAD OFFSHORE NK | TELECOM ITALIA vs. Ribbon Communications | TELECOM ITALIA vs. Verizon Communications |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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