Correlation Between Vodafone Group and U S Cellular

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

Diversification Opportunities for Vodafone Group and U S Cellular

-0.61

Correlation Coefficient

Vodafone Group  U S Cellular

Excellent diversification

The 3 months correlation between Vodafone and USM is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Vodafone Group PLC and United States Cellular in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Cellular 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 U S Cellular. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Cellular has no effect on the direction of Vodafone Group i.e., Vodafone Group and U S Cellular go up and down completely randomly.

Pair Corralation between Vodafone Group and U S Cellular

Considering the 90-day investment horizon Vodafone Group PLC is expected to under-perform the U S Cellular. In addition to that, Vodafone Group is 1.24 times more volatile than United States Cellular. It trades about -0.08 of its total potential returns per unit of risk. United States Cellular is currently generating about -0.05 per unit of volatility. If you would invest  6,515  in United States Cellular on October 7, 2024 and sell it today you would lose (249.00) from holding United States Cellular or give up 3.82% of portfolio value over 90 days.

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

Vodafone Group PLC  vs.  United States Cellular

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 abnormal 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.

United States Cellular

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in United States Cellular are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, U S Cellular displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vodafone Group and U S Cellular

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

The idea behind Vodafone Group PLC and United States Cellular 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.