Correlation Between Sage Group and Vodafone Group
Can any of the company-specific risk be diversified away by investing in both Sage Group 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 Sage Group and Vodafone Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sage Group PLC and Vodafone Group PLC, you can compare the effects of market volatilities on Sage Group 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 Sage Group with a short position of Vodafone Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sage Group and Vodafone Group.
Diversification Opportunities for Sage Group and Vodafone Group
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sage and Vodafone is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Sage Group 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 Sage 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 Sage Group 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 Sage Group i.e., Sage Group and Vodafone Group go up and down completely randomly.
Pair Corralation between Sage Group and Vodafone Group
Assuming the 90 days trading horizon Sage Group PLC is expected to generate 0.65 times more return on investment than Vodafone Group. However, Sage Group PLC is 1.53 times less risky than Vodafone Group. It trades about 0.35 of its potential returns per unit of risk. Vodafone Group PLC is currently generating about -0.01 per unit of risk. If you would invest 126,579 in Sage Group PLC on November 2, 2024 and sell it today you would earn a total of 6,321 from holding Sage Group PLC or generate 4.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sage Group PLC vs. Vodafone Group PLC
Performance |
| Timeline |
| Sage Group PLC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Vodafone Group PLC |
Sage Group and Vodafone Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sage Group and Vodafone Group
The main advantage of trading using opposite Sage Group and Vodafone Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sage Group 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.| Sage Group vs. Impax Asset Management | Sage Group vs. Datagroup SE | Sage Group vs. Applied Materials | Sage Group vs. Rosslyn Data Technologies |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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