Correlation Between INTERCONT HOTELS and Spirent Communications
Can any of the company-specific risk be diversified away by investing in both INTERCONT HOTELS and Spirent Communications 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 Spirent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INTERCONT HOTELS and Spirent Communications plc, you can compare the effects of market volatilities on INTERCONT HOTELS and Spirent Communications 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 Spirent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTERCONT HOTELS and Spirent Communications.
Diversification Opportunities for INTERCONT HOTELS and Spirent Communications
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between INTERCONT and Spirent is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding INTERCONT HOTELS and Spirent Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirent Communications 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 Spirent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirent Communications has no effect on the direction of INTERCONT HOTELS i.e., INTERCONT HOTELS and Spirent Communications go up and down completely randomly.
Pair Corralation between INTERCONT HOTELS and Spirent Communications
Assuming the 90 days trading horizon INTERCONT HOTELS is expected to generate 0.38 times more return on investment than Spirent Communications. However, INTERCONT HOTELS is 2.63 times less risky than Spirent Communications. It trades about 0.09 of its potential returns per unit of risk. Spirent Communications plc is currently generating about 0.0 per unit of risk. If you would invest 5,950 in INTERCONT HOTELS on October 11, 2024 and sell it today you would earn a total of 5,750 from holding INTERCONT HOTELS or generate 96.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INTERCONT HOTELS vs. Spirent Communications plc
Performance |
| Timeline |
| INTERCONT HOTELS |
| Spirent Communications |
INTERCONT HOTELS and Spirent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INTERCONT HOTELS and Spirent Communications
The main advantage of trading using opposite INTERCONT HOTELS and Spirent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTERCONT HOTELS position performs unexpectedly, Spirent Communications 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 Spirent Communications will offset losses from the drop in Spirent Communications' long position.| INTERCONT HOTELS vs. Packaging of | INTERCONT HOTELS vs. ERSTE GP BNK | INTERCONT HOTELS vs. W R Berkley | INTERCONT HOTELS vs. News Corporation |
| Spirent Communications vs. INTERCONT HOTELS | Spirent Communications vs. DATA MODUL | Spirent Communications vs. Sunstone Hotel Investors | Spirent Communications vs. PPHE HOTEL GROUP |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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