Correlation Between MTN Group and Vodacom Group
Can any of the company-specific risk be diversified away by investing in both MTN Group and Vodacom 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 MTN Group and Vodacom Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MTN Group Ltd and Vodacom Group Ltd, you can compare the effects of market volatilities on MTN Group and Vodacom 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 MTN Group with a short position of Vodacom Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTN Group and Vodacom Group.
Diversification Opportunities for MTN Group and Vodacom Group
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between MTN and Vodacom is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding MTN Group Ltd and Vodacom Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vodacom Group and MTN 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 MTN Group Ltd are associated (or correlated) with Vodacom Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vodacom Group has no effect on the direction of MTN Group i.e., MTN Group and Vodacom Group go up and down completely randomly.
Pair Corralation between MTN Group and Vodacom Group
Assuming the 90 days horizon MTN Group Ltd is expected to under-perform the Vodacom Group. In addition to that, MTN Group is 1.01 times more volatile than Vodacom Group Ltd. It trades about -0.18 of its total potential returns per unit of risk. Vodacom Group Ltd is currently generating about -0.11 per unit of volatility. If you would invest 642.00 in Vodacom Group Ltd on August 24, 2024 and sell it today you would lose (73.00) from holding Vodacom Group Ltd or give up 11.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MTN Group Ltd vs. Vodacom Group Ltd
Performance |
| Timeline |
| MTN Group |
| Vodacom Group |
MTN Group and Vodacom Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MTN Group and Vodacom Group
The main advantage of trading using opposite MTN Group and Vodacom Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTN Group position performs unexpectedly, Vodacom 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 Vodacom Group will offset losses from the drop in Vodacom Group's long position.| MTN Group vs. XL Axiata Tbk | MTN Group vs. Telenor ASA ADR | MTN Group vs. KT Corporation | MTN Group vs. Vodacom Group Ltd |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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