Correlation Between NIGHTINGALE HEALTH and TELECOM ITALIA

Can any of the company-specific risk be diversified away by investing in both NIGHTINGALE HEALTH 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 NIGHTINGALE HEALTH and TELECOM ITALIA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NIGHTINGALE HEALTH EO and TELECOM ITALIA, you can compare the effects of market volatilities on NIGHTINGALE HEALTH 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 NIGHTINGALE HEALTH with a short position of TELECOM ITALIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NIGHTINGALE HEALTH and TELECOM ITALIA.

Diversification Opportunities for NIGHTINGALE HEALTH and TELECOM ITALIA

-0.52

Correlation Coefficient

NIGHTINGALE HEALTH  TELECOM ITALIA

Excellent diversification

The 3 months correlation between NIGHTINGALE and TELECOM is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding NIGHTINGALE HEALTH EO and TELECOM ITALIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TELECOM ITALIA and NIGHTINGALE HEALTH 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 NIGHTINGALE HEALTH EO 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 NIGHTINGALE HEALTH i.e., NIGHTINGALE HEALTH and TELECOM ITALIA go up and down completely randomly.

Pair Corralation between NIGHTINGALE HEALTH and TELECOM ITALIA

Assuming the 90 days horizon NIGHTINGALE HEALTH EO is expected to generate 1.2 times more return on investment than TELECOM ITALIA. However, NIGHTINGALE HEALTH is 1.2 times more volatile than TELECOM ITALIA. It trades about 0.19 of its potential returns per unit of risk. TELECOM ITALIA is currently generating about 0.1 per unit of risk. If you would invest  269.00  in NIGHTINGALE HEALTH EO on October 27, 2024 and sell it today you would earn a total of  28.00  from holding NIGHTINGALE HEALTH EO or generate 10.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

NIGHTINGALE HEALTH EO  vs.  TELECOM ITALIA

NIGHTINGALE HEALTH

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NIGHTINGALE HEALTH EO are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, NIGHTINGALE HEALTH is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

TELECOM ITALIA

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TELECOM ITALIA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, TELECOM ITALIA may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with NIGHTINGALE HEALTH and TELECOM ITALIA

The main advantage of trading using opposite NIGHTINGALE HEALTH and TELECOM ITALIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NIGHTINGALE HEALTH 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 NIGHTINGALE HEALTH EO and TELECOM ITALIA 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.