Correlation Between ATT and Vodafone Group
Can any of the company-specific risk be diversified away by investing in both ATT 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 ATT and Vodafone 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 Vodafone Group PLC, you can compare the effects of market volatilities on ATT 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 ATT with a short position of Vodafone Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Vodafone Group.
Diversification Opportunities for ATT and Vodafone Group
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ATT and Vodafone is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc 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 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 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 ATT i.e., ATT and Vodafone Group go up and down completely randomly.
Pair Corralation between ATT and Vodafone Group
Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.42 times more return on investment than Vodafone Group. However, ATT Inc is 2.36 times less risky than Vodafone Group. It trades about 0.19 of its potential returns per unit of risk. Vodafone Group PLC is currently generating about -0.14 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 98.00 from holding ATT Inc or generate 4.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ATT Inc vs. Vodafone Group PLC
Performance |
| Timeline |
| ATT Inc |
| Vodafone Group PLC |
ATT and Vodafone Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and Vodafone Group
The main advantage of trading using opposite ATT and Vodafone Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT 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.| ATT vs. Liberty Broadband Srs | ATT vs. Ribbon Communications | ATT vs. Liberty Broadband Srs | ATT vs. Shenandoah Telecommunications Co |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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