Correlation Between Ebro Foods and InterContinental
Can any of the company-specific risk be diversified away by investing in both Ebro Foods 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 Ebro Foods and InterContinental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ebro Foods and InterContinental Hotels Group, you can compare the effects of market volatilities on Ebro Foods 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 Ebro Foods with a short position of InterContinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and InterContinental.
Diversification Opportunities for Ebro Foods and InterContinental
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ebro and InterContinental is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels and Ebro Foods 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 Ebro Foods 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 Ebro Foods i.e., Ebro Foods and InterContinental go up and down completely randomly.
Pair Corralation between Ebro Foods and InterContinental
Assuming the 90 days trading horizon Ebro Foods is expected to generate 9.49 times less return on investment than InterContinental. But when comparing it to its historical volatility, Ebro Foods is 1.51 times less risky than InterContinental. It trades about 0.03 of its potential returns per unit of risk. InterContinental Hotels Group is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 600,284 in InterContinental Hotels Group on August 24, 2024 and sell it today you would earn a total of 364,116 from holding InterContinental Hotels Group or generate 60.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ebro Foods vs. InterContinental Hotels Group
Performance |
| Timeline |
| Ebro Foods |
| InterContinental Hotels |
Ebro Foods and InterContinental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and InterContinental
The main advantage of trading using opposite Ebro Foods and InterContinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods 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.| Ebro Foods vs. Quadrise Plc | Ebro Foods vs. Intuitive Investments Group | Ebro Foods vs. European Metals Holdings | Ebro Foods vs. Athelney Trust plc |
| InterContinental vs. Toyota Motor Corp | InterContinental vs. SoftBank Group Corp | InterContinental vs. State Bank of | InterContinental vs. Freddie Mac |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |