Correlation Between InterContinental and InterContinental

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

Diversification Opportunities for InterContinental and InterContinental

0.91
  Correlation Coefficient

Almost no diversification

The 3 months correlation between InterContinental and InterContinental is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels 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 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 InterContinental i.e., InterContinental and InterContinental go up and down completely randomly.

Pair Corralation between InterContinental and InterContinental

Assuming the 90 days horizon InterContinental Hotels Group is expected to generate 1.04 times more return on investment than InterContinental. However, InterContinental is 1.04 times more volatile than InterContinental Hotels Group. It trades about -0.14 of its potential returns per unit of risk. InterContinental Hotels Group is currently generating about -0.16 per unit of risk. If you would invest  10,710  in InterContinental Hotels Group on December 29, 2023 and sell it today you would lose (369.00) from holding InterContinental Hotels Group or give up 3.45% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

InterContinental Hotels Group  vs.  InterContinental Hotels Group

 Performance 
       Timeline  
InterContinental Hotels 

Risk-Adjusted Performance

9 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in InterContinental Hotels Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, InterContinental reported solid returns over the last few months and may actually be approaching a breakup point.
InterContinental Hotels 

Risk-Adjusted Performance

13 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in InterContinental Hotels Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical indicators, InterContinental reported solid returns over the last few months and may actually be approaching a breakup point.

InterContinental and InterContinental Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with InterContinental and InterContinental

The main advantage of trading using opposite InterContinental and InterContinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental 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.
The idea behind InterContinental Hotels Group and InterContinental Hotels Group 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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