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

0.57

Correlation Coefficient

Comcast Corp  Telecom Italia

Very weak diversification

The 3 months correlation between Comcast and Telecom is 0.57. 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

Assuming the 90 days horizon Comcast Corp is expected to generate 0.61 times more return on investment than Telecom Italia. However, Comcast Corp is 1.64 times less risky than Telecom Italia. It trades about 0.1 of its potential returns per unit of risk. Telecom Italia SpA is currently generating about -0.02 per unit of risk. If you would invest  3,863  in Comcast Corp on September 5, 2024 and sell it today you would earn a total of  423.00  from holding Comcast Corp or generate 10.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.82%
Values	Daily Returns

Comcast Corp  vs.  Telecom Italia SpA

Comcast Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Comcast Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Comcast Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Telecom Italia SpA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Telecom Italia SpA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward-looking indicators, Telecom Italia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.