Correlation Between FORMPIPE SOFTWARE and INTERCONT HOTELS
Can any of the company-specific risk be diversified away by investing in both FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE and INTERCONT HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FORMPIPE SOFTWARE AB and INTERCONT HOTELS, you can compare the effects of market volatilities on FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE with a short position of INTERCONT HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of FORMPIPE SOFTWARE and INTERCONT HOTELS.
Diversification Opportunities for FORMPIPE SOFTWARE and INTERCONT HOTELS
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FORMPIPE and INTERCONT is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding FORMPIPE SOFTWARE AB and INTERCONT HOTELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERCONT HOTELS and FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE AB 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 FORMPIPE SOFTWARE i.e., FORMPIPE SOFTWARE and INTERCONT HOTELS go up and down completely randomly.
Pair Corralation between FORMPIPE SOFTWARE and INTERCONT HOTELS
Assuming the 90 days horizon FORMPIPE SOFTWARE is expected to generate 2.34 times less return on investment than INTERCONT HOTELS. In addition to that, FORMPIPE SOFTWARE is 1.16 times more volatile than INTERCONT HOTELS. It trades about 0.05 of its total potential returns per unit of risk. INTERCONT HOTELS is currently generating about 0.13 per unit of volatility. If you would invest 6,683 in INTERCONT HOTELS on September 14, 2024 and sell it today you would earn a total of 5,317 from holding INTERCONT HOTELS or generate 79.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FORMPIPE SOFTWARE AB vs. INTERCONT HOTELS
Performance |
| Timeline |
| FORMPIPE SOFTWARE |
| INTERCONT HOTELS |
FORMPIPE SOFTWARE and INTERCONT HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FORMPIPE SOFTWARE and INTERCONT HOTELS
The main advantage of trading using opposite FORMPIPE SOFTWARE and INTERCONT HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FORMPIPE SOFTWARE 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.| FORMPIPE SOFTWARE vs. Superior Plus Corp | FORMPIPE SOFTWARE vs. SIVERS SEMICONDUCTORS AB | FORMPIPE SOFTWARE vs. Norsk Hydro ASA | FORMPIPE SOFTWARE vs. Reliance Steel Aluminum |
| INTERCONT HOTELS vs. Hyatt Hotels | INTERCONT HOTELS vs. InterContinental Hotels Group | INTERCONT HOTELS vs. Wyndham Hotels Resorts | INTERCONT HOTELS vs. Choice Hotels International |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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