Correlation Between Telecom Italia and Liberty Broadband
Can any of the company-specific risk be diversified away by investing in both Telecom Italia and Liberty Broadband 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 Telecom Italia and Liberty Broadband into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telecom Italia SpA and Liberty Broadband Corp, you can compare the effects of market volatilities on Telecom Italia and Liberty Broadband 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 Telecom Italia with a short position of Liberty Broadband. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telecom Italia and Liberty Broadband.
Diversification Opportunities for Telecom Italia and Liberty Broadband
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telecom and Liberty is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Italia SpA and Liberty Broadband Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Broadband Corp and Telecom Italia 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 Telecom Italia SpA are associated (or correlated) with Liberty Broadband. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Broadband Corp has no effect on the direction of Telecom Italia i.e., Telecom Italia and Liberty Broadband go up and down completely randomly.
Pair Corralation between Telecom Italia and Liberty Broadband
Assuming the 90 days horizon Telecom Italia SpA is expected to generate 2.34 times more return on investment than Liberty Broadband. However, Telecom Italia is 2.34 times more volatile than Liberty Broadband Corp. It trades about 0.1 of its potential returns per unit of risk. Liberty Broadband Corp is currently generating about 0.04 per unit of risk. If you would invest 207.00 in Telecom Italia SpA on August 27, 2024 and sell it today you would earn a total of 77.00 from holding Telecom Italia SpA or generate 37.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 31.65% |
| Values | Daily Returns |
Telecom Italia SpA vs. Liberty Broadband Corp
Performance |
| Timeline |
| Telecom Italia SpA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Liberty Broadband Corp |
Telecom Italia and Liberty Broadband Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telecom Italia and Liberty Broadband
The main advantage of trading using opposite Telecom Italia and Liberty Broadband positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telecom Italia position performs unexpectedly, Liberty Broadband 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 Liberty Broadband will offset losses from the drop in Liberty Broadband's long position.| Telecom Italia vs. Verizon Communications | Telecom Italia vs. ATT Inc | Telecom Italia vs. T Mobile | Telecom Italia vs. Comcast Corp |
| Liberty Broadband vs. IHS Holding | Liberty Broadband vs. InterDigital | Liberty Broadband vs. Telephone and Data | Liberty Broadband vs. Telephone and Data |
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 Stocks Directory module to find actively traded stocks across global markets.
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