Correlation Between CAP LEASE and Telecom Italia

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

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

Diversification Opportunities for CAP LEASE and Telecom Italia

0.0

Correlation Coefficient

CAP LEASE  Telecom Italia

Pay attention - limited upside

The 3 months correlation between CAP and Telecom is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CAP LEASE AVIATION 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 CAP LEASE 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 CAP LEASE AVIATION 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 CAP LEASE i.e., CAP LEASE and Telecom Italia go up and down completely randomly.

Pair Corralation between CAP LEASE and Telecom Italia

If you would invest  38.00  in Telecom Italia SpA on April 23, 2025 and sell it today you would earn a total of  7.00  from holding Telecom Italia SpA or generate 18.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CAP LEASE AVIATION  vs.  Telecom Italia SpA

CAP LEASE AVIATION

Risk-Adjusted Performance

Very Weak

Over the last 90 days CAP LEASE AVIATION has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, CAP LEASE is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 11 (%) 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 CAP LEASE and Telecom Italia

The main advantage of trading using opposite CAP LEASE and Telecom Italia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAP LEASE 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 CAP LEASE AVIATION 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.