Correlation Between NVIDIA Corp and Telecom Italia

Can any of the company-specific risk be diversified away by investing in both NVIDIA 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 NVIDIA 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 NVIDIA Corp and Telecom Italia SpA, you can compare the effects of market volatilities on NVIDIA 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 NVIDIA Corp with a short position of Telecom Italia. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA Corp and Telecom Italia.

Diversification Opportunities for NVIDIA Corp and Telecom Italia

0.9

Correlation Coefficient

NVIDIA Corp  Telecom Italia

Almost no diversification

The 3 months correlation between NVIDIA and Telecom is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA 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 NVIDIA 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 NVIDIA 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 NVIDIA Corp i.e., NVIDIA Corp and Telecom Italia go up and down completely randomly.

Pair Corralation between NVIDIA Corp and Telecom Italia

Assuming the 90 days trading horizon NVIDIA Corp is expected to generate 1.13 times more return on investment than Telecom Italia. However, NVIDIA Corp is 1.13 times more volatile than Telecom Italia SpA. It trades about 0.4 of its potential returns per unit of risk. Telecom Italia SpA is currently generating about 0.18 per unit of risk. If you would invest  10,232  in NVIDIA Corp on April 16, 2025 and sell it today you would earn a total of  6,886  from holding NVIDIA Corp or generate 67.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

NVIDIA Corp  vs.  Telecom Italia SpA

NVIDIA Corp

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA Corp are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, NVIDIA Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Telecom Italia SpA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Telecom Italia SpA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Telecom Italia unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NVIDIA Corp and Telecom Italia

The main advantage of trading using opposite NVIDIA Corp and Telecom Italia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA 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 NVIDIA 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.