Correlation Between INTERCONT HOTELS and Bright Horizons
Can any of the company-specific risk be diversified away by investing in both INTERCONT HOTELS and Bright Horizons 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 INTERCONT HOTELS and Bright Horizons into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INTERCONT HOTELS and Bright Horizons Family, you can compare the effects of market volatilities on INTERCONT HOTELS and Bright Horizons 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 INTERCONT HOTELS with a short position of Bright Horizons. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTERCONT HOTELS and Bright Horizons.
Diversification Opportunities for INTERCONT HOTELS and Bright Horizons
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between INTERCONT and Bright is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding INTERCONT HOTELS and Bright Horizons Family in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bright Horizons Family and INTERCONT HOTELS 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 INTERCONT HOTELS are associated (or correlated) with Bright Horizons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bright Horizons Family has no effect on the direction of INTERCONT HOTELS i.e., INTERCONT HOTELS and Bright Horizons go up and down completely randomly.
Pair Corralation between INTERCONT HOTELS and Bright Horizons
Assuming the 90 days trading horizon INTERCONT HOTELS is expected to generate 1.09 times more return on investment than Bright Horizons. However, INTERCONT HOTELS is 1.09 times more volatile than Bright Horizons Family. It trades about 0.18 of its potential returns per unit of risk. Bright Horizons Family is currently generating about 0.02 per unit of risk. If you would invest 8,647 in INTERCONT HOTELS on November 3, 2024 and sell it today you would earn a total of 4,053 from holding INTERCONT HOTELS or generate 46.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
INTERCONT HOTELS vs. Bright Horizons Family
Performance |
| Timeline |
| INTERCONT HOTELS |
| Bright Horizons Family |
INTERCONT HOTELS and Bright Horizons Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INTERCONT HOTELS and Bright Horizons
The main advantage of trading using opposite INTERCONT HOTELS and Bright Horizons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTERCONT HOTELS position performs unexpectedly, Bright Horizons 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 Bright Horizons will offset losses from the drop in Bright Horizons' long position.| INTERCONT HOTELS vs. Marriott International | INTERCONT HOTELS vs. Hilton Worldwide Holdings | INTERCONT HOTELS vs. H World Group | INTERCONT HOTELS vs. Hyatt Hotels |
| Bright Horizons vs. Apollo Investment Corp | Bright Horizons vs. HK Electric Investments | Bright Horizons vs. Ribbon Communications | Bright Horizons vs. ECHO INVESTMENT ZY |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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