Correlation Between Europa Metals and InterContinental
Can any of the company-specific risk be diversified away by investing in both Europa Metals 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 Europa Metals and InterContinental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Europa Metals and InterContinental Hotels Group, you can compare the effects of market volatilities on Europa Metals 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 Europa Metals with a short position of InterContinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europa Metals and InterContinental.
Diversification Opportunities for Europa Metals and InterContinental
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Europa and InterContinental is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Europa Metals and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels and Europa Metals 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 Europa Metals 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 Europa Metals i.e., Europa Metals and InterContinental go up and down completely randomly.
Pair Corralation between Europa Metals and InterContinental
Assuming the 90 days trading horizon Europa Metals is expected to under-perform the InterContinental. In addition to that, Europa Metals is 6.16 times more volatile than InterContinental Hotels Group. It trades about -0.08 of its total potential returns per unit of risk. InterContinental Hotels Group is currently generating about -0.21 per unit of volatility. If you would invest 1,043,000 in InterContinental Hotels Group on November 27, 2024 and sell it today you would lose (73,400) from holding InterContinental Hotels Group or give up 7.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Europa Metals vs. InterContinental Hotels Group
Performance |
| Timeline |
| Europa Metals |
| InterContinental Hotels |
Europa Metals and InterContinental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Europa Metals and InterContinental
The main advantage of trading using opposite Europa Metals and InterContinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europa Metals 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.| Europa Metals vs. Liberty Media Corp | Europa Metals vs. Everyman Media Group | Europa Metals vs. G5 Entertainment AB | Europa Metals vs. Ecclesiastical Insurance Office |
| InterContinental vs. Roebuck Food Group | InterContinental vs. Tyson Foods Cl | InterContinental vs. Premier Foods PLC | InterContinental vs. Molson Coors Beverage |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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