Correlation Between TELECOM ITALIA and NIGHTINGALE HEALTH

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

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

Diversification Opportunities for TELECOM ITALIA and NIGHTINGALE HEALTH

-0.25

Correlation Coefficient

TELECOM ITALIA  NIGHTINGALE HEALTH

Very good diversification

The 3 months correlation between TELECOM and NIGHTINGALE is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding TELECOM ITALIA and NIGHTINGALE HEALTH EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIGHTINGALE HEALTH 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 NIGHTINGALE HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIGHTINGALE HEALTH has no effect on the direction of TELECOM ITALIA i.e., TELECOM ITALIA and NIGHTINGALE HEALTH go up and down completely randomly.

Pair Corralation between TELECOM ITALIA and NIGHTINGALE HEALTH

Assuming the 90 days trading horizon TELECOM ITALIA is expected to generate 11.6 times less return on investment than NIGHTINGALE HEALTH. In addition to that, TELECOM ITALIA is 1.11 times more volatile than NIGHTINGALE HEALTH EO. It trades about 0.01 of its total potential returns per unit of risk. NIGHTINGALE HEALTH EO is currently generating about 0.19 per unit of volatility. If you would invest  281.00  in NIGHTINGALE HEALTH EO on October 12, 2024 and sell it today you would earn a total of  24.00  from holding NIGHTINGALE HEALTH EO or generate 8.54% 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.  NIGHTINGALE HEALTH EO

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 uncertain basic indicators, TELECOM ITALIA may actually be approaching a critical reversion point that can send shares even higher in February 2025.

NIGHTINGALE HEALTH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NIGHTINGALE HEALTH EO has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with TELECOM ITALIA and NIGHTINGALE HEALTH

The main advantage of trading using opposite TELECOM ITALIA and NIGHTINGALE HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TELECOM ITALIA position performs unexpectedly, NIGHTINGALE HEALTH 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 NIGHTINGALE HEALTH will offset losses from the drop in NIGHTINGALE HEALTH's long position.

The idea behind TELECOM ITALIA and NIGHTINGALE HEALTH EO 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.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.