Correlation Between NorthWestern and InterContinental
Can any of the company-specific risk be diversified away by investing in both NorthWestern and InterContinental 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 NorthWestern and InterContinental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NorthWestern and InterContinental Hotels Group, you can compare the effects of market volatilities on NorthWestern and InterContinental 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 NorthWestern with a short position of InterContinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorthWestern and InterContinental.
Diversification Opportunities for NorthWestern and InterContinental
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NorthWestern and InterContinental is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding NorthWestern and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels and NorthWestern 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 NorthWestern are associated (or correlated) with InterContinental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InterContinental Hotels has no effect on the direction of NorthWestern i.e., NorthWestern and InterContinental go up and down completely randomly.
Pair Corralation between NorthWestern and InterContinental
Considering the 90-day investment horizon NorthWestern is expected to generate 1.08 times more return on investment than InterContinental. However, NorthWestern is 1.08 times more volatile than InterContinental Hotels Group. It trades about 0.11 of its potential returns per unit of risk. InterContinental Hotels Group is currently generating about -0.06 per unit of risk. If you would invest 4,919 in NorthWestern on January 25, 2024 and sell it today you would earn a total of 142.00 from holding NorthWestern or generate 2.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NorthWestern vs. InterContinental Hotels Group
Performance |
| Timeline |
| NorthWestern |
| InterContinental Hotels |
NorthWestern and InterContinental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NorthWestern and InterContinental
The main advantage of trading using opposite NorthWestern and InterContinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorthWestern position performs unexpectedly, InterContinental 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 InterContinental will offset losses from the drop in InterContinental's long position.| NorthWestern vs. Allete Inc | NorthWestern vs. Black Hills | NorthWestern vs. Otter Tail | NorthWestern vs. Avista |
| InterContinental vs. Hilton Worldwide Holdings | InterContinental vs. Marriott International | InterContinental vs. Choice Hotels International | InterContinental vs. Wyndham Hotels Resorts |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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