Correlation Between Comcast Corp and Telecom Italia

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

By analyzing existing cross correlation between Comcast Corp and Telecom Italia SpA, you can compare the effects of market volatilities on Comcast Corp 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 Comcast Corp with a short position of Telecom Italia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comcast Corp and Telecom Italia.

Diversification Opportunities for Comcast Corp and Telecom Italia

-0.5

Correlation Coefficient

Comcast Corp  Telecom Italia

Very good diversification

The 3 months correlation between Comcast and Telecom is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Comcast Corp and Telecom Italia SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecom Italia SpA and Comcast Corp 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 Comcast Corp 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 SpA has no effect on the direction of Comcast Corp i.e., Comcast Corp and Telecom Italia go up and down completely randomly.

Pair Corralation between Comcast Corp and Telecom Italia

If you would invest  327.00  in Telecom Italia SpA on January 24, 2024 and sell it today you would earn a total of  0.00  from holding Telecom Italia SpA or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	0.54%
Values	Daily Returns

Comcast Corp  vs.  Telecom Italia SpA

Comcast Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Comcast Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Telecom Italia SpA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telecom Italia SpA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Telecom Italia is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Comcast Corp and Telecom Italia

The main advantage of trading using opposite Comcast Corp and Telecom Italia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comcast Corp 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 Comcast Corp and Telecom Italia SpA 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.