Correlation Between Accor SA and Whitbread Plc
Can any of the company-specific risk be diversified away by investing in both Accor SA and Whitbread Plc 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 Whitbread Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Accor SA and Whitbread plc, you can compare the effects of market volatilities on Accor SA and Whitbread Plc 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 Whitbread Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accor SA and Whitbread Plc.
Diversification Opportunities for Accor SA and Whitbread Plc
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Accor and Whitbread is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Accor SA and Whitbread plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitbread plc 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 Whitbread Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitbread plc has no effect on the direction of Accor SA i.e., Accor SA and Whitbread Plc go up and down completely randomly.
Pair Corralation between Accor SA and Whitbread Plc
Assuming the 90 days horizon Accor SA is expected to generate 1.97 times more return on investment than Whitbread Plc. However, Accor SA is 1.97 times more volatile than Whitbread plc. It trades about 0.2 of its potential returns per unit of risk. Whitbread plc is currently generating about -0.23 per unit of risk. If you would invest 4,944 in Accor SA on November 2, 2024 and sell it today you would earn a total of 312.00 from holding Accor SA or generate 6.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Accor SA vs. Whitbread plc
Performance |
| Timeline |
| Accor SA |
| Whitbread plc |
Accor SA and Whitbread Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Accor SA and Whitbread Plc
The main advantage of trading using opposite Accor SA and Whitbread Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Accor SA position performs unexpectedly, Whitbread Plc 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 Whitbread Plc will offset losses from the drop in Whitbread Plc's long position.| Accor SA vs. Hilton Worldwide Holdings | Accor SA vs. InterContinental Hotels Group | Accor SA vs. Marriott International | Accor SA vs. Choice Hotels International |
| Whitbread Plc vs. Marriott International | Whitbread Plc vs. Hilton Worldwide Holdings | Whitbread Plc vs. InterContinental Hotels Group | Whitbread Plc vs. Accor SA |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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