Correlation Between Vodafone Group and DISH Network

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

Diversification Opportunities for Vodafone Group and DISH Network

-0.22

Correlation Coefficient

Vodafone Group  DISH Network

Very good diversification

The 3 months correlation between Vodafone and DISH is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Vodafone Group PLC and DISH Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DISH Network 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 DISH Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DISH Network has no effect on the direction of Vodafone Group i.e., Vodafone Group and DISH Network go up and down completely randomly.

Pair Corralation between Vodafone Group and DISH Network

Assuming the 90 days horizon Vodafone Group PLC is expected to generate 1.27 times more return on investment than DISH Network. However, Vodafone Group is 1.27 times more volatile than DISH Network. It trades about 0.01 of its potential returns per unit of risk. DISH Network is currently generating about -0.09 per unit of risk. If you would invest  112.00  in Vodafone Group PLC on October 11, 2024 and sell it today you would lose (27.00) from holding Vodafone Group PLC or give up 24.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	31.14%
Values	Daily Returns

Vodafone Group PLC  vs.  DISH Network

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. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

DISH Network

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DISH Network has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, DISH Network is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Vodafone Group and DISH Network

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

The idea behind Vodafone Group PLC and DISH Network 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.