Correlation Between ATT and Telecom Italia
Can any of the company-specific risk be diversified away by investing in both ATT 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 ATT and Telecom Italia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and Telecom Italia SpA, you can compare the effects of market volatilities on ATT 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 ATT with a short position of Telecom Italia. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Telecom Italia.
Diversification Opportunities for ATT and Telecom Italia
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ATT and Telecom is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc 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 ATT 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 ATT Inc 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 ATT i.e., ATT and Telecom Italia go up and down completely randomly.
Pair Corralation between ATT and Telecom Italia
If you would invest 2,254 in ATT Inc on September 1, 2024 and sell it today you would earn a total of 62.00 from holding ATT Inc or generate 2.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
ATT Inc vs. Telecom Italia SpA
Performance |
| Timeline |
| ATT Inc |
| Telecom Italia SpA |
ATT and Telecom Italia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and Telecom Italia
The main advantage of trading using opposite ATT and Telecom Italia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT 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.The idea behind ATT Inc and Telecom Italia SpA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Telecom Italia vs. Liberty Broadband Srs | Telecom Italia vs. Cogent Communications Group | Telecom Italia vs. Charter Communications | Telecom Italia vs. Liberty Broadband Srs |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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