Correlation Between Boeing and INTERCONT HOTELS
Can any of the company-specific risk be diversified away by investing in both Boeing and INTERCONT HOTELS 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 Boeing and INTERCONT HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and INTERCONT HOTELS, you can compare the effects of market volatilities on Boeing and INTERCONT HOTELS 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 Boeing with a short position of INTERCONT HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and INTERCONT HOTELS.
Diversification Opportunities for Boeing and INTERCONT HOTELS
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Boeing and INTERCONT is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and INTERCONT HOTELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERCONT HOTELS and Boeing 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 The Boeing are associated (or correlated) with INTERCONT HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERCONT HOTELS has no effect on the direction of Boeing i.e., Boeing and INTERCONT HOTELS go up and down completely randomly.
Pair Corralation between Boeing and INTERCONT HOTELS
Assuming the 90 days trading horizon The Boeing is expected to under-perform the INTERCONT HOTELS. In addition to that, Boeing is 1.17 times more volatile than INTERCONT HOTELS. It trades about -0.02 of its total potential returns per unit of risk. INTERCONT HOTELS is currently generating about 0.11 per unit of volatility. If you would invest 5,904 in INTERCONT HOTELS on August 29, 2024 and sell it today you would earn a total of 5,696 from holding INTERCONT HOTELS or generate 96.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Boeing vs. INTERCONT HOTELS
Performance |
| Timeline |
| Boeing |
| INTERCONT HOTELS |
Boeing and INTERCONT HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and INTERCONT HOTELS
The main advantage of trading using opposite Boeing and INTERCONT HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, INTERCONT HOTELS 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 INTERCONT HOTELS will offset losses from the drop in INTERCONT HOTELS's long position.The idea behind The Boeing and INTERCONT HOTELS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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