Correlation Between Vodafone Group and European Metals
Can any of the company-specific risk be diversified away by investing in both Vodafone Group and European Metals 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 European Metals 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 European Metals Holdings, you can compare the effects of market volatilities on Vodafone Group and European Metals 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 European Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vodafone Group and European Metals.
Diversification Opportunities for Vodafone Group and European Metals
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vodafone and European is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Vodafone Group PLC and European Metals Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Metals Holdings 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 European Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Metals Holdings has no effect on the direction of Vodafone Group i.e., Vodafone Group and European Metals go up and down completely randomly.
Pair Corralation between Vodafone Group and European Metals
Assuming the 90 days trading horizon Vodafone Group PLC is expected to generate 0.85 times more return on investment than European Metals. However, Vodafone Group PLC is 1.18 times less risky than European Metals. It trades about -0.09 of its potential returns per unit of risk. European Metals Holdings is currently generating about -0.2 per unit of risk. If you would invest 7,366 in Vodafone Group PLC on August 26, 2024 and sell it today you would lose (358.00) from holding Vodafone Group PLC or give up 4.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vodafone Group PLC vs. European Metals Holdings
Performance |
| Timeline |
| Vodafone Group PLC |
| European Metals Holdings |
Vodafone Group and European Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vodafone Group and European Metals
The main advantage of trading using opposite Vodafone Group and European Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vodafone Group position performs unexpectedly, European Metals 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 European Metals will offset losses from the drop in European Metals' long position.| Vodafone Group vs. European Metals Holdings | Vodafone Group vs. Komercni Banka | Vodafone Group vs. Cornish Metals | Vodafone Group vs. Discover Financial Services |
| European Metals vs. G5 Entertainment AB | European Metals vs. Centaur Media | European Metals vs. Atalaya Mining | European Metals vs. Flutter Entertainment PLC |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |