Correlation Between Vodafone Group and Telenor ASA
Can any of the company-specific risk be diversified away by investing in both Vodafone Group and Telenor ASA 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 Telenor ASA 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 Telenor ASA ADR, you can compare the effects of market volatilities on Vodafone Group and Telenor ASA 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 Telenor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vodafone Group and Telenor ASA.
Diversification Opportunities for Vodafone Group and Telenor ASA
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vodafone and Telenor is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Vodafone Group PLC and Telenor ASA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telenor ASA ADR 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 Telenor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telenor ASA ADR has no effect on the direction of Vodafone Group i.e., Vodafone Group and Telenor ASA go up and down completely randomly.
Pair Corralation between Vodafone Group and Telenor ASA
Considering the 90-day investment horizon Vodafone Group is expected to generate 16.06 times less return on investment than Telenor ASA. In addition to that, Vodafone Group is 1.26 times more volatile than Telenor ASA ADR. It trades about 0.0 of its total potential returns per unit of risk. Telenor ASA ADR is currently generating about 0.06 per unit of volatility. If you would invest 815.00 in Telenor ASA ADR on August 25, 2024 and sell it today you would earn a total of 359.00 from holding Telenor ASA ADR or generate 44.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vodafone Group PLC vs. Telenor ASA ADR
Performance |
| Timeline |
| Vodafone Group PLC |
| Telenor ASA ADR |
Vodafone Group and Telenor ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vodafone Group and Telenor ASA
The main advantage of trading using opposite Vodafone Group and Telenor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vodafone Group position performs unexpectedly, Telenor ASA 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 Telenor ASA will offset losses from the drop in Telenor ASA's long position.| Vodafone Group vs. Telefonica Brasil SA | Vodafone Group vs. Orange SA ADR | Vodafone Group vs. Grupo Televisa SAB | Vodafone Group vs. America Movil SAB |
| Telenor ASA vs. HUMANA INC | Telenor ASA vs. SCOR PK | Telenor ASA vs. Aquagold International | Telenor ASA vs. Barloworld Ltd ADR |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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