Correlation Between Fresnillo PLC and InterContinental
Can any of the company-specific risk be diversified away by investing in both Fresnillo PLC 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 Fresnillo PLC and InterContinental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fresnillo PLC and InterContinental Hotels Group, you can compare the effects of market volatilities on Fresnillo PLC 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 Fresnillo PLC with a short position of InterContinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresnillo PLC and InterContinental.
Diversification Opportunities for Fresnillo PLC and InterContinental
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fresnillo and InterContinental is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Fresnillo PLC and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels and Fresnillo PLC 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 Fresnillo PLC 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 Fresnillo PLC i.e., Fresnillo PLC and InterContinental go up and down completely randomly.
Pair Corralation between Fresnillo PLC and InterContinental
Assuming the 90 days trading horizon Fresnillo PLC is expected to under-perform the InterContinental. In addition to that, Fresnillo PLC is 1.92 times more volatile than InterContinental Hotels Group. It trades about -0.19 of its total potential returns per unit of risk. InterContinental Hotels Group is currently generating about 0.55 per unit of volatility. If you would invest 847,400 in InterContinental Hotels Group on September 4, 2024 and sell it today you would earn a total of 138,200 from holding InterContinental Hotels Group or generate 16.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fresnillo PLC vs. InterContinental Hotels Group
Performance |
| Timeline |
| Fresnillo PLC |
| InterContinental Hotels |
Fresnillo PLC and InterContinental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fresnillo PLC and InterContinental
The main advantage of trading using opposite Fresnillo PLC and InterContinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresnillo PLC 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.| Fresnillo PLC vs. InterContinental Hotels Group | Fresnillo PLC vs. Fresenius Medical Care | Fresnillo PLC vs. Zegona Communications Plc | Fresnillo PLC vs. Cairo Communication SpA |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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