Correlation Between Vodafone Group and BCE
Can any of the company-specific risk be diversified away by investing in both Vodafone Group and BCE 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 BCE 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 BCE Inc, you can compare the effects of market volatilities on Vodafone Group and BCE 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 BCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vodafone Group and BCE.
Diversification Opportunities for Vodafone Group and BCE
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vodafone and BCE is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Vodafone Group PLC and BCE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCE Inc 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 BCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCE Inc has no effect on the direction of Vodafone Group i.e., Vodafone Group and BCE go up and down completely randomly.
Pair Corralation between Vodafone Group and BCE
Assuming the 90 days horizon Vodafone Group PLC is expected to generate 5.95 times more return on investment than BCE. However, Vodafone Group is 5.95 times more volatile than BCE Inc. It trades about 0.02 of its potential returns per unit of risk. BCE Inc is currently generating about 0.04 per unit of risk. If you would invest 85.00 in Vodafone Group PLC on August 27, 2024 and sell it today you would earn a total of 1.00 from holding Vodafone Group PLC or generate 1.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 81.05% |
| Values | Daily Returns |
Vodafone Group PLC vs. BCE Inc
Performance |
| Timeline |
| Vodafone Group PLC |
| BCE Inc |
Vodafone Group and BCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vodafone Group and BCE
The main advantage of trading using opposite Vodafone Group and BCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vodafone Group position performs unexpectedly, BCE 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 BCE will offset losses from the drop in BCE's long position.| Vodafone Group vs. KDDI Corp | Vodafone Group vs. Amrica Mvil, SAB | Vodafone Group vs. Singapore Telecommunications Limited | Vodafone Group vs. ATT Inc |
| BCE vs. Vodafone Group PLC | BCE vs. KDDI Corp | BCE vs. Amrica Mvil, SAB | BCE vs. Singapore Telecommunications Limited |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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