Correlation Between Vodafone Group and Comcast Corp

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

Diversification Opportunities for Vodafone Group and Comcast Corp

0.29

Correlation Coefficient

Vodafone Group  Comcast Corp

Modest diversification

The 3 months correlation between Vodafone and Comcast is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Vodafone Group PLC and Comcast Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comcast Corp 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 Comcast Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comcast Corp has no effect on the direction of Vodafone Group i.e., Vodafone Group and Comcast Corp go up and down completely randomly.

Pair Corralation between Vodafone Group and Comcast Corp

Considering the 90-day investment horizon Vodafone Group PLC is expected to generate 1.31 times more return on investment than Comcast Corp. However, Vodafone Group is 1.31 times more volatile than Comcast Corp. It trades about -0.04 of its potential returns per unit of risk. Comcast Corp is currently generating about -0.13 per unit of risk. If you would invest  894.00  in Vodafone Group PLC on February 5, 2024 and sell it today you would lose (32.00) from holding Vodafone Group PLC or give up 3.58% of portfolio value over 90 days.

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

Vodafone Group PLC  vs.  Comcast Corp

Vodafone Group PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vodafone Group PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Vodafone Group is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Comcast Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Comcast Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Vodafone Group and Comcast Corp

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

The idea behind Vodafone Group PLC and Comcast Corp 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.