Correlation Between Airtel Africa and Vodafone Group
Can any of the company-specific risk be diversified away by investing in both Airtel Africa 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 Airtel Africa and Vodafone Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Airtel Africa Plc and Vodafone Group PLC, you can compare the effects of market volatilities on Airtel Africa 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 Airtel Africa with a short position of Vodafone Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airtel Africa and Vodafone Group.
Diversification Opportunities for Airtel Africa and Vodafone Group
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Airtel and Vodafone is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Airtel Africa Plc 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 Airtel Africa 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 Airtel Africa Plc 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 Airtel Africa i.e., Airtel Africa and Vodafone Group go up and down completely randomly.
Pair Corralation between Airtel Africa and Vodafone Group
Assuming the 90 days horizon Airtel Africa Plc is expected to generate 13.41 times more return on investment than Vodafone Group. However, Airtel Africa is 13.41 times more volatile than Vodafone Group PLC. It trades about 0.05 of its potential returns per unit of risk. Vodafone Group PLC is currently generating about 0.0 per unit of risk. If you would invest 13.00 in Airtel Africa Plc on November 19, 2024 and sell it today you would earn a total of 1,494 from holding Airtel Africa Plc or generate 11492.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 71.28% |
| Values | Daily Returns |
Airtel Africa Plc vs. Vodafone Group PLC
Performance |
| Timeline |
| Airtel Africa Plc |
| Vodafone Group PLC |
Airtel Africa and Vodafone Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airtel Africa and Vodafone Group
The main advantage of trading using opposite Airtel Africa and Vodafone Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airtel Africa 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.| Airtel Africa vs. LB Foster | Airtel Africa vs. CDW Corp | Airtel Africa vs. Asbury Automotive Group | Airtel Africa vs. Imax Corp |
| Vodafone Group vs. KDDI Corp | Vodafone Group vs. Amrica Mvil, SAB | Vodafone Group vs. Airtel Africa Plc | Vodafone Group vs. BCE Inc |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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