Correlation Between TELECOM ITALIA and WEC Energy
Can any of the company-specific risk be diversified away by investing in both TELECOM ITALIA and WEC Energy 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 WEC Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TELECOM ITALIA and WEC Energy Group, you can compare the effects of market volatilities on TELECOM ITALIA and WEC Energy 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 WEC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of TELECOM ITALIA and WEC Energy.
Diversification Opportunities for TELECOM ITALIA and WEC Energy
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between TELECOM and WEC is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding TELECOM ITALIA and WEC Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WEC Energy Group 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 are associated (or correlated) with WEC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WEC Energy Group has no effect on the direction of TELECOM ITALIA i.e., TELECOM ITALIA and WEC Energy go up and down completely randomly.
Pair Corralation between TELECOM ITALIA and WEC Energy
Assuming the 90 days trading horizon TELECOM ITALIA is expected to generate 1.44 times more return on investment than WEC Energy. However, TELECOM ITALIA is 1.44 times more volatile than WEC Energy Group. It trades about 0.21 of its potential returns per unit of risk. WEC Energy Group is currently generating about 0.23 per unit of risk. If you would invest 24.00 in TELECOM ITALIA on October 21, 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TELECOM ITALIA vs. WEC Energy Group
Performance |
| Timeline |
| TELECOM ITALIA |
| WEC Energy Group |
TELECOM ITALIA and WEC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TELECOM ITALIA and WEC Energy
The main advantage of trading using opposite TELECOM ITALIA and WEC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TELECOM ITALIA position performs unexpectedly, WEC Energy 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 WEC Energy will offset losses from the drop in WEC Energy's long position.| TELECOM ITALIA vs. ALBIS LEASING AG | TELECOM ITALIA vs. ALTAIR RES INC | TELECOM ITALIA vs. Sixt Leasing SE | TELECOM ITALIA vs. LOANDEPOT INC A |
| WEC Energy vs. Charter Communications | WEC Energy vs. Chengdu PUTIAN Telecommunications | WEC Energy vs. TELECOM ITALIA | WEC Energy vs. Cleanaway Waste Management |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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