Correlation Between Liberty Global and Vodafone Group
Can any of the company-specific risk be diversified away by investing in both Liberty Global 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 Liberty Global and Vodafone Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Global PLC and Vodafone Group PLC, you can compare the effects of market volatilities on Liberty Global 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 Liberty Global with a short position of Vodafone Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Global and Vodafone Group.
Diversification Opportunities for Liberty Global and Vodafone Group
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Liberty and Vodafone is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Global 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 Liberty Global 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 Liberty Global 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 Liberty Global i.e., Liberty Global and Vodafone Group go up and down completely randomly.
Pair Corralation between Liberty Global and Vodafone Group
Assuming the 90 days horizon Liberty Global PLC is expected to under-perform the Vodafone Group. In addition to that, Liberty Global is 3.89 times more volatile than Vodafone Group PLC. It trades about -0.14 of its total potential returns per unit of risk. Vodafone Group PLC is currently generating about -0.09 per unit of volatility. If you would invest 93.00 in Vodafone Group PLC on August 31, 2024 and sell it today you would lose (5.00) from holding Vodafone Group PLC or give up 5.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Global PLC vs. Vodafone Group PLC
Performance |
| Timeline |
| Liberty Global PLC |
| Vodafone Group PLC |
Liberty Global and Vodafone Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Global and Vodafone Group
The main advantage of trading using opposite Liberty Global and Vodafone Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Global 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.| Liberty Global vs. Liberty Global PLC | Liberty Global vs. Liberty Latin America | Liberty Global vs. Liberty Latin America | Liberty Global vs. Liberty Broadband Srs |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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