Correlation Between Dow Jones and INTERCONT HOTELS
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and INTERCONT HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and INTERCONT HOTELS, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of INTERCONT HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and INTERCONT HOTELS.
Diversification Opportunities for Dow Jones and INTERCONT HOTELS
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dow and INTERCONT is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and INTERCONT HOTELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERCONT HOTELS and Dow Jones 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 Dow Jones Industrial 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 Dow Jones i.e., Dow Jones and INTERCONT HOTELS go up and down completely randomly.
Pair Corralation between Dow Jones and INTERCONT HOTELS
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.78 times less return on investment than INTERCONT HOTELS. But when comparing it to its historical volatility, Dow Jones Industrial is 2.26 times less risky than INTERCONT HOTELS. It trades about 0.08 of its potential returns per unit of risk. INTERCONT HOTELS is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 5,998 in INTERCONT HOTELS on October 20, 2024 and sell it today you would earn a total of 5,902 from holding INTERCONT HOTELS or generate 98.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. INTERCONT HOTELS
Performance |
| Timeline |
Dow Jones and INTERCONT HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
INTERCONT HOTELS
Pair trading matchups for INTERCONT HOTELS
Pair Trading with Dow Jones and INTERCONT HOTELS
The main advantage of trading using opposite Dow Jones and INTERCONT HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Aluminum of | Dow Jones vs. Adtalem Global Education | Dow Jones vs. East Africa Metals | Dow Jones vs. Western Copper and |
| INTERCONT HOTELS vs. Packaging of | INTERCONT HOTELS vs. ERSTE GP BNK | INTERCONT HOTELS vs. W R Berkley | INTERCONT HOTELS vs. News Corporation |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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