Correlation Between Altice USA and Vodafone Group

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

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

Diversification Opportunities for Altice USA and Vodafone Group

-0.27

Correlation Coefficient

Altice USA  Vodafone Group

Very good diversification

The 3 months correlation between Altice and Vodafone is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Altice USA 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 Altice USA 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 Altice USA 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 Altice USA i.e., Altice USA and Vodafone Group go up and down completely randomly.

Pair Corralation between Altice USA and Vodafone Group

Given the investment horizon of 90 days Altice USA is expected to generate 2.04 times more return on investment than Vodafone Group. However, Altice USA is 2.04 times more volatile than Vodafone Group PLC. It trades about 0.08 of its potential returns per unit of risk. Vodafone Group PLC is currently generating about -0.08 per unit of risk. If you would invest  254.00  in Altice USA on October 25, 2024 and sell it today you would earn a total of  37.50  from holding Altice USA or generate 14.76% return on investment over 90 days.

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

Altice USA  vs.  Vodafone Group PLC

Altice USA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Altice USA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Altice USA unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Altice USA and Vodafone Group

The main advantage of trading using opposite Altice USA and Vodafone Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altice USA 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 Altice USA 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.