Correlation Between DATA MODUL and InterContinental
Can any of the company-specific risk be diversified away by investing in both DATA MODUL 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 DATA MODUL and InterContinental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DATA MODUL and InterContinental Hotels Group, you can compare the effects of market volatilities on DATA MODUL 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 DATA MODUL with a short position of InterContinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of DATA MODUL and InterContinental.
Diversification Opportunities for DATA MODUL and InterContinental
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between DATA and InterContinental is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding DATA MODUL and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels and DATA MODUL 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 DATA MODUL 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 DATA MODUL i.e., DATA MODUL and InterContinental go up and down completely randomly.
Pair Corralation between DATA MODUL and InterContinental
Assuming the 90 days trading horizon DATA MODUL is expected to under-perform the InterContinental. In addition to that, DATA MODUL is 1.56 times more volatile than InterContinental Hotels Group. It trades about -0.05 of its total potential returns per unit of risk. InterContinental Hotels Group is currently generating about 0.1 per unit of volatility. If you would invest 6,244 in InterContinental Hotels Group on October 11, 2024 and sell it today you would earn a total of 5,556 from holding InterContinental Hotels Group or generate 88.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DATA MODUL vs. InterContinental Hotels Group
Performance |
| Timeline |
| DATA MODUL |
| InterContinental Hotels |
DATA MODUL and InterContinental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DATA MODUL and InterContinental
The main advantage of trading using opposite DATA MODUL and InterContinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DATA MODUL 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.| DATA MODUL vs. InterContinental Hotels Group | DATA MODUL vs. PLAYMATES TOYS | DATA MODUL vs. USWE SPORTS AB | DATA MODUL vs. Playmates Toys Limited |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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