Correlation Between TPG Telecom and Vodafone Group
Can any of the company-specific risk be diversified away by investing in both TPG Telecom 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 TPG Telecom and Vodafone Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TPG Telecom Limited and Vodafone Group PLC, you can compare the effects of market volatilities on TPG Telecom 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 TPG Telecom with a short position of Vodafone Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of TPG Telecom and Vodafone Group.
Diversification Opportunities for TPG Telecom and Vodafone Group
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between TPG and Vodafone is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding TPG Telecom Limited 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 TPG Telecom 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 TPG Telecom Limited 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 TPG Telecom i.e., TPG Telecom and Vodafone Group go up and down completely randomly.
Pair Corralation between TPG Telecom and Vodafone Group
Assuming the 90 days horizon TPG Telecom is expected to generate 13.14 times less return on investment than Vodafone Group. But when comparing it to its historical volatility, TPG Telecom Limited is 14.24 times less risky than Vodafone Group. It trades about 0.02 of its potential returns per unit of risk. Vodafone Group PLC is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 96.00 in Vodafone Group PLC on August 25, 2024 and sell it today you would lose (9.00) from holding Vodafone Group PLC or give up 9.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 83.1% |
| Values | Daily Returns |
TPG Telecom Limited vs. Vodafone Group PLC
Performance |
| Timeline |
| TPG Telecom Limited |
| Vodafone Group PLC |
TPG Telecom and Vodafone Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TPG Telecom and Vodafone Group
The main advantage of trading using opposite TPG Telecom and Vodafone Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TPG Telecom 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.| TPG Telecom vs. Vodafone Group PLC | TPG Telecom vs. KDDI Corp | TPG Telecom vs. Amrica Mvil, SAB | TPG Telecom vs. Singapore Telecommunications Limited |
| Vodafone Group vs. KDDI Corp | Vodafone Group vs. Amrica Mvil, SAB | Vodafone Group vs. Airtel Africa Plc | Vodafone Group vs. BCE Inc |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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