Correlation Between Mativ Holdings and Telecom

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

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

Diversification Opportunities for Mativ Holdings and Telecom

0.47

Correlation Coefficient

Mativ Holdings  Telecom

Very weak diversification

The 3 months correlation between Mativ and Telecom is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Mativ Holdings and Telecom Italia Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecom Italia Capital and Mativ Holdings 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 Mativ Holdings are associated (or correlated) with Telecom. 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 Capital has no effect on the direction of Mativ Holdings i.e., Mativ Holdings and Telecom go up and down completely randomly.

Pair Corralation between Mativ Holdings and Telecom

Given the investment horizon of 90 days Mativ Holdings is expected to under-perform the Telecom. In addition to that, Mativ Holdings is 2.8 times more volatile than Telecom Italia Capital. It trades about -0.17 of its total potential returns per unit of risk. Telecom Italia Capital is currently generating about -0.08 per unit of volatility. If you would invest  10,000  in Telecom Italia Capital on September 27, 2024 and sell it today you would lose (660.00) from holding Telecom Italia Capital or give up 6.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Mativ Holdings  vs.  Telecom Italia Capital

Mativ Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mativ Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Telecom Italia Capital

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Mativ Holdings and Telecom

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

The idea behind Mativ Holdings and Telecom Italia Capital 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.