Correlation Between INTERCONT HOTELS and Ultra Clean
Can any of the company-specific risk be diversified away by investing in both INTERCONT HOTELS and Ultra Clean 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 Ultra Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INTERCONT HOTELS and Ultra Clean Holdings, you can compare the effects of market volatilities on INTERCONT HOTELS and Ultra Clean 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 Ultra Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTERCONT HOTELS and Ultra Clean.
Diversification Opportunities for INTERCONT HOTELS and Ultra Clean
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between INTERCONT and Ultra is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding INTERCONT HOTELS and Ultra Clean Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultra Clean Holdings 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 Ultra Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultra Clean Holdings has no effect on the direction of INTERCONT HOTELS i.e., INTERCONT HOTELS and Ultra Clean go up and down completely randomly.
Pair Corralation between INTERCONT HOTELS and Ultra Clean
Assuming the 90 days trading horizon INTERCONT HOTELS is expected to generate 0.49 times more return on investment than Ultra Clean. However, INTERCONT HOTELS is 2.02 times less risky than Ultra Clean. It trades about 0.12 of its potential returns per unit of risk. Ultra Clean Holdings is currently generating about -0.01 per unit of risk. If you would invest 8,896 in INTERCONT HOTELS on August 28, 2024 and sell it today you would earn a total of 2,704 from holding INTERCONT HOTELS or generate 30.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INTERCONT HOTELS vs. Ultra Clean Holdings
Performance |
| Timeline |
| INTERCONT HOTELS |
| Ultra Clean Holdings |
INTERCONT HOTELS and Ultra Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INTERCONT HOTELS and Ultra Clean
The main advantage of trading using opposite INTERCONT HOTELS and Ultra Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTERCONT HOTELS position performs unexpectedly, Ultra Clean 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 Ultra Clean will offset losses from the drop in Ultra Clean's long position.The idea behind INTERCONT HOTELS and Ultra Clean Holdings 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.| Ultra Clean vs. Canadian Utilities Limited | Ultra Clean vs. CapitaLand Investment Limited | Ultra Clean vs. WisdomTree Investments | Ultra Clean vs. REGAL ASIAN INVESTMENTS |
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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