Correlation Between Aristocrat Leisure and InterContinental
Can any of the company-specific risk be diversified away by investing in both Aristocrat Leisure 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 Aristocrat Leisure and InterContinental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aristocrat Leisure Limited and InterContinental Hotels Group, you can compare the effects of market volatilities on Aristocrat Leisure 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 Aristocrat Leisure with a short position of InterContinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristocrat Leisure and InterContinental.
Diversification Opportunities for Aristocrat Leisure and InterContinental
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aristocrat and InterContinental is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure Limited and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels and Aristocrat Leisure 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 Aristocrat Leisure Limited 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 Aristocrat Leisure i.e., Aristocrat Leisure and InterContinental go up and down completely randomly.
Pair Corralation between Aristocrat Leisure and InterContinental
Assuming the 90 days horizon Aristocrat Leisure Limited is expected to under-perform the InterContinental. In addition to that, Aristocrat Leisure is 1.0 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 0.18 per unit of volatility. If you would invest 12,000 in InterContinental Hotels Group on October 28, 2024 and sell it today you would earn a total of 500.00 from holding InterContinental Hotels Group or generate 4.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aristocrat Leisure Limited vs. InterContinental Hotels Group
Performance |
| Timeline |
| Aristocrat Leisure |
| InterContinental Hotels |
Aristocrat Leisure and InterContinental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aristocrat Leisure and InterContinental
The main advantage of trading using opposite Aristocrat Leisure and InterContinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristocrat Leisure 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.| Aristocrat Leisure vs. VELA TECHNOLPLC LS 0001 | Aristocrat Leisure vs. Perdoceo Education | Aristocrat Leisure vs. PKSHA TECHNOLOGY INC | Aristocrat Leisure vs. ASPEN TECHINC DL |
| InterContinental vs. Lery Seafood Group | InterContinental vs. Austevoll Seafood ASA | InterContinental vs. Carsales | InterContinental vs. MTY Food Group |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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