Correlation Between Federal Realty and Vodafone Group
Can any of the company-specific risk be diversified away by investing in both Federal Realty and Vodafone Group 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 Federal Realty and Vodafone Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Realty Investment and Vodafone Group PLC, you can compare the effects of market volatilities on Federal Realty and Vodafone Group 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 Federal Realty with a short position of Vodafone Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Realty and Vodafone Group.
Diversification Opportunities for Federal Realty and Vodafone Group
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Federal and Vodafone is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Federal Realty Investment and Vodafone Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vodafone Group PLC and Federal Realty 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 Federal Realty Investment are associated (or correlated) with Vodafone Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vodafone Group PLC has no effect on the direction of Federal Realty i.e., Federal Realty and Vodafone Group go up and down completely randomly.
Pair Corralation between Federal Realty and Vodafone Group
Assuming the 90 days trading horizon Federal Realty Investment is expected to generate 1.02 times more return on investment than Vodafone Group. However, Federal Realty is 1.02 times more volatile than Vodafone Group PLC. It trades about -0.16 of its potential returns per unit of risk. Vodafone Group PLC is currently generating about -0.3 per unit of risk. If you would invest 11,615 in Federal Realty Investment on September 25, 2024 and sell it today you would lose (409.00) from holding Federal Realty Investment or give up 3.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Realty Investment vs. Vodafone Group PLC
Performance |
| Timeline |
| Federal Realty Investment |
| Vodafone Group PLC |
Federal Realty and Vodafone Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Realty and Vodafone Group
The main advantage of trading using opposite Federal Realty and Vodafone Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Realty position performs unexpectedly, Vodafone Group 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 Vodafone Group will offset losses from the drop in Vodafone Group's long position.| Federal Realty vs. Uniper SE | Federal Realty vs. Mulberry Group PLC | Federal Realty vs. London Security Plc | Federal Realty vs. Triad Group PLC |
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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