Correlation Between Vodafone Group and Caffyns PLC
Can any of the company-specific risk be diversified away by investing in both Vodafone Group and Caffyns PLC 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 Caffyns PLC 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 Caffyns PLC, you can compare the effects of market volatilities on Vodafone Group and Caffyns PLC 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 Caffyns PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vodafone Group and Caffyns PLC.
Diversification Opportunities for Vodafone Group and Caffyns PLC
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Vodafone and Caffyns is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Vodafone Group PLC and Caffyns PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caffyns 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 Caffyns PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caffyns PLC has no effect on the direction of Vodafone Group i.e., Vodafone Group and Caffyns PLC go up and down completely randomly.
Pair Corralation between Vodafone Group and Caffyns PLC
Assuming the 90 days trading horizon Vodafone Group PLC is expected to under-perform the Caffyns PLC. But the stock apears to be less risky and, when comparing its historical volatility, Vodafone Group PLC is 1.17 times less risky than Caffyns PLC. The stock trades about -0.03 of its potential returns per unit of risk. The Caffyns PLC is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 52,290 in Caffyns PLC on August 30, 2024 and sell it today you would lose (9,790) from holding Caffyns PLC or give up 18.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vodafone Group PLC vs. Caffyns PLC
Performance |
| Timeline |
| Vodafone Group PLC |
| Caffyns PLC |
Vodafone Group and Caffyns PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vodafone Group and Caffyns PLC
The main advantage of trading using opposite Vodafone Group and Caffyns PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vodafone Group position performs unexpectedly, Caffyns PLC 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 Caffyns PLC will offset losses from the drop in Caffyns PLC's long position.| Vodafone Group vs. Gaztransport et Technigaz | Vodafone Group vs. Synchrony Financial | Vodafone Group vs. International Consolidated Airlines | Vodafone Group vs. Royal Bank of |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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