Correlation Between Vodafone Group and Sherborne Investors

Can any of the company-specific risk be diversified away by investing in both Vodafone Group and Sherborne Investors 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 Sherborne Investors 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 Sherborne Investors Guernsey, you can compare the effects of market volatilities on Vodafone Group and Sherborne Investors 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 Sherborne Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vodafone Group and Sherborne Investors.

Diversification Opportunities for Vodafone Group and Sherborne Investors

-0.77

Correlation Coefficient

Vodafone Group  Sherborne Investors

Pay attention - limited upside

The 3 months correlation between Vodafone and Sherborne is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Vodafone Group PLC and Sherborne Investors Guernsey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sherborne Investors 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 Sherborne Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sherborne Investors has no effect on the direction of Vodafone Group i.e., Vodafone Group and Sherborne Investors go up and down completely randomly.

Pair Corralation between Vodafone Group and Sherborne Investors

Assuming the 90 days trading horizon Vodafone Group PLC is expected to under-perform the Sherborne Investors. In addition to that, Vodafone Group is 1.87 times more volatile than Sherborne Investors Guernsey. It trades about -0.06 of its total potential returns per unit of risk. Sherborne Investors Guernsey is currently generating about 0.08 per unit of volatility. If you would invest  4,985  in Sherborne Investors Guernsey on September 3, 2024 and sell it today you would earn a total of  215.00  from holding Sherborne Investors Guernsey or generate 4.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Vodafone Group PLC  vs.  Sherborne Investors Guernsey

Vodafone Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vodafone Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Vodafone Group is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Sherborne Investors

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sherborne Investors Guernsey are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Sherborne Investors is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Vodafone Group and Sherborne Investors

The main advantage of trading using opposite Vodafone Group and Sherborne Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vodafone Group position performs unexpectedly, Sherborne Investors 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 Sherborne Investors will offset losses from the drop in Sherborne Investors' long position.

The idea behind Vodafone Group PLC and Sherborne Investors Guernsey pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Stocks Directory module to find actively traded stocks across global markets.