Correlation Between TELECOM ITALIA and Intel

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

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

Diversification Opportunities for TELECOM ITALIA and Intel

-0.63

Correlation Coefficient

TELECOM ITALIA  Intel

Excellent diversification

The 3 months correlation between TELECOM and Intel is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding TELECOM ITALIA and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel 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 Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of TELECOM ITALIA i.e., TELECOM ITALIA and Intel go up and down completely randomly.

Pair Corralation between TELECOM ITALIA and Intel

Assuming the 90 days trading horizon TELECOM ITALIA is expected to generate 1.74 times more return on investment than Intel. However, TELECOM ITALIA is 1.74 times more volatile than Intel. It trades about 0.17 of its potential returns per unit of risk. Intel is currently generating about 0.0 per unit of risk. If you would invest  24.00  in TELECOM ITALIA on October 11, 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	Weak
Accuracy	100.0%
Values	Daily Returns

TELECOM ITALIA  vs.  Intel

TELECOM ITALIA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TELECOM ITALIA are ranked lower than 4 (%) 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.

Intel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with TELECOM ITALIA and Intel

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

The idea behind TELECOM ITALIA and Intel 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.