Correlation Between InterContinental and Expedia
Can any of the company-specific risk be diversified away by investing in both InterContinental and Expedia 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 Expedia 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 Expedia Group, you can compare the effects of market volatilities on InterContinental and Expedia 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 Expedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and Expedia.
Diversification Opportunities for InterContinental and Expedia
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between InterContinental and Expedia is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and Expedia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expedia Group 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 Expedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expedia Group has no effect on the direction of InterContinental i.e., InterContinental and Expedia go up and down completely randomly.
Pair Corralation between InterContinental and Expedia
Considering the 90-day investment horizon InterContinental Hotels Group is expected to generate 0.87 times more return on investment than Expedia. However, InterContinental Hotels Group is 1.14 times less risky than Expedia. It trades about -0.27 of its potential returns per unit of risk. Expedia Group is currently generating about -0.28 per unit of risk. If you would invest 10,423 in InterContinental Hotels Group on January 20, 2024 and sell it today you would lose (621.00) from holding InterContinental Hotels Group or give up 5.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
InterContinental Hotels Group vs. Expedia Group
Performance |
| Timeline |
| InterContinental Hotels |
| Expedia Group |
InterContinental and Expedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and Expedia
The main advantage of trading using opposite InterContinental and Expedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, Expedia 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 Expedia will offset losses from the drop in Expedia's long position.| InterContinental vs. Yatra Online | InterContinental vs. Despegar Corp | InterContinental vs. Mondee Holdings | InterContinental vs. MakeMyTrip Limited |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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