Correlation Between Hilton Worldwide and INTERCONT HOTELS
Can any of the company-specific risk be diversified away by investing in both Hilton Worldwide 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 Hilton Worldwide and INTERCONT HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hilton Worldwide Holdings and INTERCONT HOTELS, you can compare the effects of market volatilities on Hilton Worldwide 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 Hilton Worldwide with a short position of INTERCONT HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilton Worldwide and INTERCONT HOTELS.
Diversification Opportunities for Hilton Worldwide and INTERCONT HOTELS
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hilton and INTERCONT is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Worldwide Holdings and INTERCONT HOTELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERCONT HOTELS and Hilton Worldwide 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 Hilton Worldwide Holdings 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 Hilton Worldwide i.e., Hilton Worldwide and INTERCONT HOTELS go up and down completely randomly.
Pair Corralation between Hilton Worldwide and INTERCONT HOTELS
Assuming the 90 days trading horizon Hilton Worldwide is expected to generate 2.54 times less return on investment than INTERCONT HOTELS. But when comparing it to its historical volatility, Hilton Worldwide Holdings is 1.61 times less risky than INTERCONT HOTELS. It trades about 0.17 of its potential returns per unit of risk. INTERCONT HOTELS is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 10,200 in INTERCONT HOTELS on August 31, 2024 and sell it today you would earn a total of 1,700 from holding INTERCONT HOTELS or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hilton Worldwide Holdings vs. INTERCONT HOTELS
Performance |
| Timeline |
| Hilton Worldwide Holdings |
| INTERCONT HOTELS |
Hilton Worldwide and INTERCONT HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hilton Worldwide and INTERCONT HOTELS
The main advantage of trading using opposite Hilton Worldwide and INTERCONT HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hilton Worldwide 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.The idea behind Hilton Worldwide Holdings and INTERCONT HOTELS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| INTERCONT HOTELS vs. Hilton Worldwide Holdings | INTERCONT HOTELS vs. InterContinental Hotels Group | INTERCONT HOTELS vs. ACCOR SPADR NEW |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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