Correlation Between Vodacom Group and Standard Bank
Can any of the company-specific risk be diversified away by investing in both Vodacom Group and Standard Bank 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 Vodacom Group and Standard Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vodacom Group Ltd and Standard Bank Group, you can compare the effects of market volatilities on Vodacom Group and Standard Bank 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 Vodacom Group with a short position of Standard Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vodacom Group and Standard Bank.
Diversification Opportunities for Vodacom Group and Standard Bank
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Vodacom and Standard is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Vodacom Group Ltd and Standard Bank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Bank Group and Vodacom 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 Vodacom Group Ltd are associated (or correlated) with Standard Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Bank Group has no effect on the direction of Vodacom Group i.e., Vodacom Group and Standard Bank go up and down completely randomly.
Pair Corralation between Vodacom Group and Standard Bank
Assuming the 90 days horizon Vodacom Group is expected to generate 1.89 times less return on investment than Standard Bank. In addition to that, Vodacom Group is 1.22 times more volatile than Standard Bank Group. It trades about 0.05 of its total potential returns per unit of risk. Standard Bank Group is currently generating about 0.12 per unit of volatility. If you would invest 955.00 in Standard Bank Group on September 3, 2024 and sell it today you would earn a total of 364.00 from holding Standard Bank Group or generate 38.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vodacom Group Ltd vs. Standard Bank Group
Performance |
| Timeline |
| Vodacom Group |
| Standard Bank Group |
Vodacom Group and Standard Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vodacom Group and Standard Bank
The main advantage of trading using opposite Vodacom Group and Standard Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vodacom Group position performs unexpectedly, Standard Bank 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 Standard Bank will offset losses from the drop in Standard Bank's long position.| Vodacom Group vs. XL Axiata Tbk | Vodacom Group vs. Telenor ASA ADR | Vodacom Group vs. Tele2 AB | Vodacom Group vs. MTN Group Ltd |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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