Correlation Between Accor SA and InterContinental
Can any of the company-specific risk be diversified away by investing in both Accor SA 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 Accor SA and InterContinental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Accor SA and InterContinental Hotels Group, you can compare the effects of market volatilities on Accor SA 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 Accor SA with a short position of InterContinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accor SA and InterContinental.
Diversification Opportunities for Accor SA and InterContinental
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Accor and InterContinental is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Accor SA and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels and Accor SA 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 Accor SA 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 Accor SA i.e., Accor SA and InterContinental go up and down completely randomly.
Pair Corralation between Accor SA and InterContinental
Assuming the 90 days horizon Accor SA is expected to generate 2.52 times less return on investment than InterContinental. But when comparing it to its historical volatility, Accor SA is 1.04 times less risky than InterContinental. It trades about 0.04 of its potential returns per unit of risk. InterContinental Hotels Group is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 9,800 in InterContinental Hotels Group on September 1, 2024 and sell it today you would earn a total of 2,455 from holding InterContinental Hotels Group or generate 25.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Accor SA vs. InterContinental Hotels Group
Performance |
| Timeline |
| Accor SA |
| InterContinental Hotels |
Accor SA and InterContinental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Accor SA and InterContinental
The main advantage of trading using opposite Accor SA and InterContinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Accor SA 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.| Accor SA vs. Huazhu Group | Accor SA vs. GreenTree Hospitality Group | Accor SA vs. Soho House Co | Accor SA vs. InterContinental Hotels Group |
| InterContinental vs. Hyatt Hotels | InterContinental vs. Choice Hotels International | InterContinental vs. Hilton Worldwide Holdings | 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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