Correlation Between Vodafone Group and Eclectic Bar

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Can any of the company-specific risk be diversified away by investing in both Vodafone Group and Eclectic Bar 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 Vodafone Group and Eclectic Bar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vodafone Group PLC and Eclectic Bar Group, you can compare the effects of market volatilities on Vodafone Group and Eclectic Bar 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 Vodafone Group with a short position of Eclectic Bar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vodafone Group and Eclectic Bar.

Diversification Opportunities for Vodafone Group and Eclectic Bar

-0.53
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Vodafone and Eclectic is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Vodafone Group PLC and Eclectic Bar Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eclectic Bar Group and Vodafone Group 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 Vodafone Group PLC are associated (or correlated) with Eclectic Bar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eclectic Bar Group has no effect on the direction of Vodafone Group i.e., Vodafone Group and Eclectic Bar go up and down completely randomly.

Pair Corralation between Vodafone Group and Eclectic Bar

Assuming the 90 days trading horizon Vodafone Group PLC is expected to under-perform the Eclectic Bar. But the stock apears to be less risky and, when comparing its historical volatility, Vodafone Group PLC is 19.62 times less risky than Eclectic Bar. The stock trades about -0.32 of its potential returns per unit of risk. The Eclectic Bar Group is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  2,200  in Eclectic Bar Group on September 24, 2024 and sell it today you would earn a total of  2,500  from holding Eclectic Bar Group or generate 113.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Vodafone Group PLC  vs.  Eclectic Bar Group

 Performance 
       Timeline  
Vodafone Group PLC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Vodafone Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
Eclectic Bar Group 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Eclectic Bar Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Eclectic Bar exhibited solid returns over the last few months and may actually be approaching a breakup point.

Vodafone Group and Eclectic Bar Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vodafone Group and Eclectic Bar

The main advantage of trading using opposite Vodafone Group and Eclectic Bar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vodafone Group position performs unexpectedly, Eclectic Bar 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 Eclectic Bar will offset losses from the drop in Eclectic Bar's long position.
The idea behind Vodafone Group PLC and Eclectic Bar Group 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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