Correlation Between Vodafone Group and RLJ Lodging
Can any of the company-specific risk be diversified away by investing in both Vodafone Group and RLJ Lodging 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 RLJ Lodging 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 RLJ Lodging Trust, you can compare the effects of market volatilities on Vodafone Group and RLJ Lodging 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 RLJ Lodging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vodafone Group and RLJ Lodging.
Diversification Opportunities for Vodafone Group and RLJ Lodging
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vodafone and RLJ is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Vodafone Group PLC and RLJ Lodging Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RLJ Lodging Trust 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 RLJ Lodging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RLJ Lodging Trust has no effect on the direction of Vodafone Group i.e., Vodafone Group and RLJ Lodging go up and down completely randomly.
Pair Corralation between Vodafone Group and RLJ Lodging
Considering the 90-day investment horizon Vodafone Group PLC is expected to under-perform the RLJ Lodging. In addition to that, Vodafone Group is 1.5 times more volatile than RLJ Lodging Trust. It trades about -0.02 of its total potential returns per unit of risk. RLJ Lodging Trust is currently generating about 0.47 per unit of volatility. If you would invest 877.00 in RLJ Lodging Trust on September 2, 2024 and sell it today you would earn a total of 144.00 from holding RLJ Lodging Trust or generate 16.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vodafone Group PLC vs. RLJ Lodging Trust
Performance |
| Timeline |
| Vodafone Group PLC |
| RLJ Lodging Trust |
Vodafone Group and RLJ Lodging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vodafone Group and RLJ Lodging
The main advantage of trading using opposite Vodafone Group and RLJ Lodging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vodafone Group position performs unexpectedly, RLJ Lodging 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 RLJ Lodging will offset losses from the drop in RLJ Lodging's long position.| Vodafone Group vs. TIM Participacoes SA | Vodafone Group vs. PLDT Inc ADR | Vodafone Group vs. Liberty Broadband Srs | Vodafone Group vs. Liberty Broadband Srs |
| RLJ Lodging vs. Sunstone Hotel Investors | RLJ Lodging vs. Pebblebrook Hotel Trust | RLJ Lodging vs. Summit Hotel Properties | RLJ Lodging vs. Ryman Hospitality Properties |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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