Correlation Between Vodafone Group and MAHLE Metal
Can any of the company-specific risk be diversified away by investing in both Vodafone Group and MAHLE Metal 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 Vodafone Group and MAHLE Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vodafone Group Public and MAHLE Metal Leve, you can compare the effects of market volatilities on Vodafone Group and MAHLE Metal 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 Vodafone Group with a short position of MAHLE Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vodafone Group and MAHLE Metal.
Diversification Opportunities for Vodafone Group and MAHLE Metal
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vodafone and MAHLE is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Vodafone Group Public and MAHLE Metal Leve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAHLE Metal Leve and Vodafone Group 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 Vodafone Group Public are associated (or correlated) with MAHLE Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAHLE Metal Leve has no effect on the direction of Vodafone Group i.e., Vodafone Group and MAHLE Metal go up and down completely randomly.
Pair Corralation between Vodafone Group and MAHLE Metal
Assuming the 90 days trading horizon Vodafone Group Public is expected to generate 1.4 times more return on investment than MAHLE Metal. However, Vodafone Group is 1.4 times more volatile than MAHLE Metal Leve. It trades about 0.03 of its potential returns per unit of risk. MAHLE Metal Leve is currently generating about 0.04 per unit of risk. If you would invest 2,348 in Vodafone Group Public on September 5, 2024 and sell it today you would earn a total of 346.00 from holding Vodafone Group Public or generate 14.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.4% |
| Values | Daily Returns |
Vodafone Group Public vs. MAHLE Metal Leve
Performance |
| Timeline |
| Vodafone Group Public |
| MAHLE Metal Leve |
Vodafone Group and MAHLE Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vodafone Group and MAHLE Metal
The main advantage of trading using opposite Vodafone Group and MAHLE Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vodafone Group position performs unexpectedly, MAHLE Metal 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 MAHLE Metal will offset losses from the drop in MAHLE Metal's long position.| Vodafone Group vs. MAHLE Metal Leve | Vodafone Group vs. Taiwan Semiconductor Manufacturing | Vodafone Group vs. G2D Investments | Vodafone Group vs. Metalurgica Gerdau SA |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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