Correlation Between InterContinental and Vodafone Group
Can any of the company-specific risk be diversified away by investing in both InterContinental 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 InterContinental and Vodafone Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InterContinental Hotels Group and Vodafone Group PLC, you can compare the effects of market volatilities on InterContinental 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 InterContinental with a short position of Vodafone Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and Vodafone Group.
Diversification Opportunities for InterContinental and Vodafone Group
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between InterContinental and Vodafone is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group 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 InterContinental 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 InterContinental Hotels Group 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 InterContinental i.e., InterContinental and Vodafone Group go up and down completely randomly.
Pair Corralation between InterContinental and Vodafone Group
Assuming the 90 days trading horizon InterContinental Hotels Group is expected to generate 0.75 times more return on investment than Vodafone Group. However, InterContinental Hotels Group is 1.34 times less risky than Vodafone Group. It trades about 0.3 of its potential returns per unit of risk. Vodafone Group PLC is currently generating about 0.01 per unit of risk. If you would invest 986,800 in InterContinental Hotels Group on October 20, 2024 and sell it today you would earn a total of 49,700 from holding InterContinental Hotels Group or generate 5.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
InterContinental Hotels Group vs. Vodafone Group PLC
Performance |
| Timeline |
| InterContinental Hotels |
| Vodafone Group PLC |
InterContinental and Vodafone Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and Vodafone Group
The main advantage of trading using opposite InterContinental and Vodafone Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental 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.| InterContinental vs. bet at home AG | InterContinental vs. Roadside Real Estate | InterContinental vs. Cairn Homes PLC | InterContinental vs. Ecclesiastical Insurance Office |
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Check out your portfolio center.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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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