Correlation Between Despegar Corp and InterContinental
Can any of the company-specific risk be diversified away by investing in both Despegar Corp 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 Despegar Corp and InterContinental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Despegar Corp and InterContinental Hotels Group, you can compare the effects of market volatilities on Despegar Corp 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 Despegar Corp with a short position of InterContinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Despegar Corp and InterContinental.
Diversification Opportunities for Despegar Corp and InterContinental
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Despegar and InterContinental is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Despegar Corp and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels and Despegar Corp 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 Despegar Corp 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 Despegar Corp i.e., Despegar Corp and InterContinental go up and down completely randomly.
Pair Corralation between Despegar Corp and InterContinental
Given the investment horizon of 90 days Despegar Corp is expected to generate 2.61 times more return on investment than InterContinental. However, Despegar Corp is 2.61 times more volatile than InterContinental Hotels Group. It trades about 0.09 of its potential returns per unit of risk. InterContinental Hotels Group is currently generating about 0.11 per unit of risk. If you would invest 910.00 in Despegar Corp on September 14, 2024 and sell it today you would earn a total of 778.00 from holding Despegar Corp or generate 85.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Despegar Corp vs. InterContinental Hotels Group
Performance |
| Timeline |
| Despegar Corp |
| InterContinental Hotels |
Despegar Corp and InterContinental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Despegar Corp and InterContinental
The main advantage of trading using opposite Despegar Corp and InterContinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Despegar Corp 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.| Despegar Corp vs. Yatra Online | Despegar Corp vs. Mondee Holdings | Despegar Corp vs. MakeMyTrip Limited | Despegar Corp vs. Tuniu Corp |
| InterContinental vs. Yatra Online | InterContinental vs. Mondee Holdings | InterContinental vs. MakeMyTrip Limited | InterContinental vs. Tuniu Corp |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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