Correlation Between EJF Investments and Vodafone Group

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

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

Diversification Opportunities for EJF Investments and Vodafone Group

0.39

Correlation Coefficient

EJF Investments  Vodafone Group

Weak diversification

The 3 months correlation between EJF and Vodafone is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding EJF Investments 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 EJF Investments 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 EJF Investments 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 EJF Investments i.e., EJF Investments and Vodafone Group go up and down completely randomly.

Pair Corralation between EJF Investments and Vodafone Group

Assuming the 90 days trading horizon EJF Investments is expected to generate 2.17 times less return on investment than Vodafone Group. In addition to that, EJF Investments is 1.06 times more volatile than Vodafone Group PLC. It trades about 0.05 of its total potential returns per unit of risk. Vodafone Group PLC is currently generating about 0.12 per unit of volatility. If you would invest  6,648  in Vodafone Group PLC on December 22, 2024 and sell it today you would earn a total of  886.00  from holding Vodafone Group PLC or generate 13.33% return on investment over 90 days.

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

EJF Investments  vs.  Vodafone Group PLC

EJF Investments

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in EJF Investments are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, EJF Investments may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Vodafone Group PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vodafone Group PLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Vodafone Group exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EJF Investments and Vodafone Group

The main advantage of trading using opposite EJF Investments and Vodafone Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EJF Investments 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 EJF Investments 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.