Correlation Between Telia Company and Vodafone Group
Can any of the company-specific risk be diversified away by investing in both Telia Company 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 Telia Company and Vodafone Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telia Company AB and Vodafone Group PLC, you can compare the effects of market volatilities on Telia Company 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 Telia Company with a short position of Vodafone Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telia Company and Vodafone Group.
Diversification Opportunities for Telia Company and Vodafone Group
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telia and Vodafone is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Telia Company AB 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 Telia Company 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 Telia Company AB 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 Telia Company i.e., Telia Company and Vodafone Group go up and down completely randomly.
Pair Corralation between Telia Company and Vodafone Group
If you would invest 85.00 in Vodafone Group PLC on November 3, 2024 and sell it today you would earn a total of 1.00 from holding Vodafone Group PLC or generate 1.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Telia Company AB vs. Vodafone Group PLC
Performance |
| Timeline |
| Telia Company |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Vodafone Group PLC |
Telia Company and Vodafone Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telia Company and Vodafone Group
The main advantage of trading using opposite Telia Company and Vodafone Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telia Company 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.| Telia Company vs. Root Inc | Telia Company vs. Goosehead Insurance | Telia Company vs. NETGEAR | Telia Company vs. The Peoples Insurance |
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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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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