Correlation Between Vodafone Group and ATT

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

Diversification Opportunities for Vodafone Group and ATT

-0.51

Correlation Coefficient

Vodafone Group  ATT

Excellent diversification

The 3 months correlation between Vodafone and ATT is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Vodafone Group Plc and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT 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 ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of Vodafone Group i.e., Vodafone Group and ATT go up and down completely randomly.

Pair Corralation between Vodafone Group and ATT

Assuming the 90 days trading horizon Vodafone Group Plc is expected to under-perform the ATT. But the stock apears to be less risky and, when comparing its historical volatility, Vodafone Group Plc is 1.06 times less risky than ATT. The stock trades about -0.13 of its potential returns per unit of risk. The ATT Inc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  41,929  in ATT Inc on September 25, 2024 and sell it today you would earn a total of  3,577  from holding ATT Inc or generate 8.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Vodafone Group Plc  vs.  ATT Inc

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

ATT Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, ATT may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Vodafone Group and ATT

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

The idea behind Vodafone Group Plc and ATT Inc 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.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.