Correlation Between ATN International and Vodafone Group

Can any of the company-specific risk be diversified away by investing in both ATN International and Vodafone Group 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 ATN International and Vodafone Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ATN International and Vodafone Group PLC, you can compare the effects of market volatilities on ATN International and Vodafone Group 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 ATN International with a short position of Vodafone Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATN International and Vodafone Group.

Diversification Opportunities for ATN International and Vodafone Group

0.84

Correlation Coefficient

ATN International  Vodafone Group

Very poor diversification

The 3 months correlation between ATN and Vodafone is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding ATN International and Vodafone Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vodafone Group PLC and ATN International 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 ATN International are associated (or correlated) with Vodafone Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vodafone Group PLC has no effect on the direction of ATN International i.e., ATN International and Vodafone Group go up and down completely randomly.

Pair Corralation between ATN International and Vodafone Group

Given the investment horizon of 90 days ATN International is expected to generate 1.89 times more return on investment than Vodafone Group. However, ATN International is 1.89 times more volatile than Vodafone Group PLC. It trades about 0.21 of its potential returns per unit of risk. Vodafone Group PLC is currently generating about 0.19 per unit of risk. If you would invest  1,646  in ATN International on December 19, 2024 and sell it today you would earn a total of  622.00  from holding ATN International or generate 37.79% return on investment over 90 days.

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

ATN International  vs.  Vodafone Group PLC

ATN International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ATN International are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, ATN International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Vodafone Group PLC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vodafone Group PLC are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Vodafone Group exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ATN International and Vodafone Group

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

The idea behind ATN International and Vodafone Group PLC 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.