Correlation Between Vodafone Group and Tele2 AB
Can any of the company-specific risk be diversified away by investing in both Vodafone Group and Tele2 AB 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 Tele2 AB 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 Tele2 AB, you can compare the effects of market volatilities on Vodafone Group and Tele2 AB 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 Tele2 AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vodafone Group and Tele2 AB.
Diversification Opportunities for Vodafone Group and Tele2 AB
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vodafone and Tele2 is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Vodafone Group PLC and Tele2 AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tele2 AB 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 Tele2 AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tele2 AB has no effect on the direction of Vodafone Group i.e., Vodafone Group and Tele2 AB go up and down completely randomly.
Pair Corralation between Vodafone Group and Tele2 AB
Considering the 90-day investment horizon Vodafone Group PLC is expected to under-perform the Tele2 AB. But the stock apears to be less risky and, when comparing its historical volatility, Vodafone Group PLC is 1.65 times less risky than Tele2 AB. The stock trades about 0.0 of its potential returns per unit of risk. The Tele2 AB is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 483.00 in Tele2 AB on September 3, 2024 and sell it today you would earn a total of 33.00 from holding Tele2 AB or generate 6.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vodafone Group PLC vs. Tele2 AB
Performance |
| Timeline |
| Vodafone Group PLC |
| Tele2 AB |
Vodafone Group and Tele2 AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vodafone Group and Tele2 AB
The main advantage of trading using opposite Vodafone Group and Tele2 AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vodafone Group position performs unexpectedly, Tele2 AB 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 Tele2 AB will offset losses from the drop in Tele2 AB's long position.| Vodafone Group vs. Highway Holdings Limited | Vodafone Group vs. QCR Holdings | Vodafone Group vs. Partner Communications | Vodafone Group vs. Acumen Pharmaceuticals |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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