Correlation Between Vodafone Group and Abingdon Health
Can any of the company-specific risk be diversified away by investing in both Vodafone Group and Abingdon Health 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 Abingdon Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vodafone Group PLC and Abingdon Health Plc, you can compare the effects of market volatilities on Vodafone Group and Abingdon Health 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 Abingdon Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vodafone Group and Abingdon Health.
Diversification Opportunities for Vodafone Group and Abingdon Health
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vodafone and Abingdon is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Vodafone Group PLC and Abingdon Health Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abingdon Health Plc 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 PLC are associated (or correlated) with Abingdon Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abingdon Health Plc has no effect on the direction of Vodafone Group i.e., Vodafone Group and Abingdon Health go up and down completely randomly.
Pair Corralation between Vodafone Group and Abingdon Health
Assuming the 90 days trading horizon Vodafone Group PLC is expected to generate 0.44 times more return on investment than Abingdon Health. However, Vodafone Group PLC is 2.3 times less risky than Abingdon Health. It trades about 0.0 of its potential returns per unit of risk. Abingdon Health Plc is currently generating about -0.01 per unit of risk. If you would invest 7,126 in Vodafone Group PLC on August 26, 2024 and sell it today you would lose (118.00) from holding Vodafone Group PLC or give up 1.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vodafone Group PLC vs. Abingdon Health Plc
Performance |
| Timeline |
| Vodafone Group PLC |
| Abingdon Health Plc |
Vodafone Group and Abingdon Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vodafone Group and Abingdon Health
The main advantage of trading using opposite Vodafone Group and Abingdon Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vodafone Group position performs unexpectedly, Abingdon Health 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 Abingdon Health will offset losses from the drop in Abingdon Health's long position.| Vodafone Group vs. Prosiebensat 1 Media | Vodafone Group vs. AcadeMedia AB | Vodafone Group vs. Anglesey Mining | Vodafone Group vs. AMG Advanced Metallurgical |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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