Correlation Between H World and InterContinental
Can any of the company-specific risk be diversified away by investing in both H World 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 H World and InterContinental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between H World Group and InterContinental Hotels Group, you can compare the effects of market volatilities on H World 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 H World with a short position of InterContinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of H World and InterContinental.
Diversification Opportunities for H World and InterContinental
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CL4A and InterContinental is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding H World Group and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels and H World 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 H World Group 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 H World i.e., H World and InterContinental go up and down completely randomly.
Pair Corralation between H World and InterContinental
Assuming the 90 days trading horizon H World Group is expected to under-perform the InterContinental. In addition to that, H World is 1.15 times more volatile than InterContinental Hotels Group. It trades about -0.12 of its total potential returns per unit of risk. InterContinental Hotels Group is currently generating about 0.35 per unit of volatility. If you would invest 10,300 in InterContinental Hotels Group on August 28, 2024 and sell it today you would earn a total of 1,400 from holding InterContinental Hotels Group or generate 13.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
H World Group vs. InterContinental Hotels Group
Performance |
| Timeline |
| H World Group |
| InterContinental Hotels |
H World and InterContinental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with H World and InterContinental
The main advantage of trading using opposite H World and InterContinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H World 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.The idea behind H World Group and InterContinental Hotels Group 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.| InterContinental vs. GALENA MINING LTD | InterContinental vs. Zijin Mining Group | InterContinental vs. Gladstone Investment | InterContinental vs. PennyMac Mortgage 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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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