Correlation Between TELECOM ITALIA and Evolent Health

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

By analyzing existing cross correlation between TELECOM ITALIA and Evolent Health, you can compare the effects of market volatilities on TELECOM ITALIA and Evolent Health 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 TELECOM ITALIA with a short position of Evolent Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of TELECOM ITALIA and Evolent Health.

Diversification Opportunities for TELECOM ITALIA and Evolent Health

0.33

Correlation Coefficient

TELECOM ITALIA  Evolent Health

Weak diversification

The 3 months correlation between TELECOM and Evolent is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding TELECOM ITALIA and Evolent Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolent Health and TELECOM ITALIA 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 TELECOM ITALIA are associated (or correlated) with Evolent Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolent Health has no effect on the direction of TELECOM ITALIA i.e., TELECOM ITALIA and Evolent Health go up and down completely randomly.

Pair Corralation between TELECOM ITALIA and Evolent Health

Assuming the 90 days trading horizon TELECOM ITALIA is expected to generate 0.72 times more return on investment than Evolent Health. However, TELECOM ITALIA is 1.39 times less risky than Evolent Health. It trades about 0.04 of its potential returns per unit of risk. Evolent Health is currently generating about -0.04 per unit of risk. If you would invest  26.00  in TELECOM ITALIA on April 24, 2025 and sell it today you would earn a total of  14.00  from holding TELECOM ITALIA or generate 53.85% return on investment over 90 days.

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

TELECOM ITALIA  vs.  Evolent Health

TELECOM ITALIA

Risk-Adjusted Performance

Good

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

Evolent Health

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Evolent Health are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Evolent Health may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with TELECOM ITALIA and Evolent Health

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

The idea behind TELECOM ITALIA and Evolent Health 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.