Correlation Between Telecom Italia and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both Telecom Italia and Ebro Foods 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 Ebro Foods 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 Ebro Foods, you can compare the effects of market volatilities on Telecom Italia and Ebro Foods 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 Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telecom Italia and Ebro Foods.
Diversification Opportunities for Telecom Italia and Ebro Foods
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telecom and Ebro is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Italia SpA and Ebro Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods 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 Ebro Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ebro Foods has no effect on the direction of Telecom Italia i.e., Telecom Italia and Ebro Foods go up and down completely randomly.
Pair Corralation between Telecom Italia and Ebro Foods
Assuming the 90 days trading horizon Telecom Italia SpA is expected to under-perform the Ebro Foods. In addition to that, Telecom Italia is 4.45 times more volatile than Ebro Foods. It trades about -0.01 of its total potential returns per unit of risk. Ebro Foods is currently generating about 0.02 per unit of volatility. If you would invest 1,589 in Ebro Foods on October 5, 2024 and sell it today you would earn a total of 10.00 from holding Ebro Foods or generate 0.63% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Telecom Italia SpA vs. Ebro Foods
Performance |
Timeline |
Telecom Italia SpA |
Ebro Foods |
Telecom Italia and Ebro Foods Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Telecom Italia and Ebro Foods
The main advantage of trading using opposite Telecom Italia and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telecom Italia position performs unexpectedly, Ebro Foods 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 Ebro Foods will offset losses from the drop in Ebro Foods' long position.Telecom Italia vs. Concurrent Technologies Plc | Telecom Italia vs. Pressure Technologies Plc | Telecom Italia vs. Molson Coors Beverage | Telecom Italia vs. Young Cos Brewery |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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