Correlation Between Great West and InterContinental
Can any of the company-specific risk be diversified away by investing in both Great West 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 Great West and InterContinental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great West Lifeco and InterContinental Hotels Group, you can compare the effects of market volatilities on Great West 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 Great West with a short position of InterContinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great West and InterContinental.
Diversification Opportunities for Great West and InterContinental
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Great and InterContinental is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Great West Lifeco and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels and Great West 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 Great West Lifeco 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 Great West i.e., Great West and InterContinental go up and down completely randomly.
Pair Corralation between Great West and InterContinental
Assuming the 90 days horizon Great West Lifeco is expected to under-perform the InterContinental. But the stock apears to be less risky and, when comparing its historical volatility, Great West Lifeco is 1.29 times less risky than InterContinental. The stock trades about -0.16 of its potential returns per unit of risk. The InterContinental Hotels Group is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 11,400 in InterContinental Hotels Group on September 14, 2024 and sell it today you would earn a total of 700.00 from holding InterContinental Hotels Group or generate 6.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great West Lifeco vs. InterContinental Hotels Group
Performance |
| Timeline |
| Great West Lifeco |
| InterContinental Hotels |
Great West and InterContinental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great West and InterContinental
The main advantage of trading using opposite Great West and InterContinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great West 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.| Great West vs. CyberArk Software | Great West vs. Corsair Gaming | Great West vs. Check Point Software | Great West vs. VITEC SOFTWARE GROUP |
| InterContinental vs. Performance Food Group | InterContinental vs. TYSON FOODS A | InterContinental vs. Iridium Communications | InterContinental vs. National Beverage 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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