Correlation Between TelstraLimited and Vodafone Group
Can any of the company-specific risk be diversified away by investing in both TelstraLimited 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 TelstraLimited and Vodafone Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telstra Limited and Vodafone Group PLC, you can compare the effects of market volatilities on TelstraLimited 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 TelstraLimited with a short position of Vodafone Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of TelstraLimited and Vodafone Group.
Diversification Opportunities for TelstraLimited and Vodafone Group
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TelstraLimited and Vodafone is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Telstra 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 TelstraLimited 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 Telstra 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 TelstraLimited i.e., TelstraLimited and Vodafone Group go up and down completely randomly.
Pair Corralation between TelstraLimited and Vodafone Group
Assuming the 90 days horizon TelstraLimited is expected to generate 1.7 times less return on investment than Vodafone Group. In addition to that, TelstraLimited is 1.01 times more volatile than Vodafone Group PLC. It trades about 0.02 of its total potential returns per unit of risk. Vodafone Group PLC is currently generating about 0.03 per unit of volatility. If you would invest 80.00 in Vodafone Group PLC on August 25, 2024 and sell it today you would earn a total of 7.00 from holding Vodafone Group PLC or generate 8.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 79.37% |
| Values | Daily Returns |
Telstra Limited vs. Vodafone Group PLC
Performance |
| Timeline |
| Telstra Limited |
| Vodafone Group PLC |
TelstraLimited and Vodafone Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TelstraLimited and Vodafone Group
The main advantage of trading using opposite TelstraLimited and Vodafone Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TelstraLimited 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.| TelstraLimited vs. Proximus NV ADR | TelstraLimited vs. Singapore Telecommunications Limited | TelstraLimited vs. MTN Group Ltd | TelstraLimited vs. Tele2 AB |
| 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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