Correlation Between ATT and Vodacom Group
Can any of the company-specific risk be diversified away by investing in both ATT 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 ATT and Vodacom Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and Vodacom Group Ltd, you can compare the effects of market volatilities on ATT 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 ATT with a short position of Vodacom Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Vodacom Group.
Diversification Opportunities for ATT and Vodacom Group
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ATT and Vodacom is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Vodacom Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vodacom Group and ATT 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 ATT Inc 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 ATT i.e., ATT and Vodacom Group go up and down completely randomly.
Pair Corralation between ATT and Vodacom Group
Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.43 times more return on investment than Vodacom Group. However, ATT Inc is 2.3 times less risky than Vodacom Group. It trades about 0.22 of its potential returns per unit of risk. Vodacom Group Ltd is currently generating about -0.13 per unit of risk. If you would invest 2,211 in ATT Inc on August 29, 2024 and sell it today you would earn a total of 116.50 from holding ATT Inc or generate 5.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ATT Inc vs. Vodacom Group Ltd
Performance |
| Timeline |
| ATT Inc |
| Vodacom Group |
ATT and Vodacom Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and Vodacom Group
The main advantage of trading using opposite ATT and Vodacom Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT 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.The idea behind ATT Inc and Vodacom Group Ltd 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.| Vodacom Group vs. XL Axiata Tbk | Vodacom Group vs. Telenor ASA ADR | Vodacom Group vs. Tele2 AB | Vodacom Group vs. MTN Group Ltd |
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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