Correlation Between GoldMining and InterContinental
Can any of the company-specific risk be diversified away by investing in both GoldMining 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 GoldMining and InterContinental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GoldMining and InterContinental Hotels Group, you can compare the effects of market volatilities on GoldMining 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 GoldMining with a short position of InterContinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoldMining and InterContinental.
Diversification Opportunities for GoldMining and InterContinental
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GoldMining and InterContinental is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels and GoldMining 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 GoldMining 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 GoldMining i.e., GoldMining and InterContinental go up and down completely randomly.
Pair Corralation between GoldMining and InterContinental
Assuming the 90 days trading horizon GoldMining is expected to under-perform the InterContinental. In addition to that, GoldMining is 2.6 times more volatile than InterContinental Hotels Group. It trades about -0.06 of its total potential returns per unit of risk. InterContinental Hotels Group is currently generating about 0.15 per unit of volatility. If you would invest 789,794 in InterContinental Hotels Group on September 2, 2024 and sell it today you would earn a total of 190,206 from holding InterContinental Hotels Group or generate 24.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 51.16% |
| Values | Daily Returns |
GoldMining vs. InterContinental Hotels Group
Performance |
| Timeline |
| GoldMining |
| InterContinental Hotels |
GoldMining and InterContinental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GoldMining and InterContinental
The main advantage of trading using opposite GoldMining and InterContinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoldMining 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.| GoldMining vs. European Metals Holdings | GoldMining vs. Cornish Metals | GoldMining vs. Virgin Wines UK | GoldMining vs. Gaztransport et Technigaz |
| InterContinental vs. Sligro Food Group | InterContinental vs. Hilton Food Group | InterContinental vs. Leroy Seafood Group | InterContinental vs. Summit Materials Cl |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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