Correlation Between InterContinental and Northern Graphite
Can any of the company-specific risk be diversified away by investing in both InterContinental and Northern Graphite 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 InterContinental and Northern Graphite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InterContinental Hotels Group and Northern Graphite, you can compare the effects of market volatilities on InterContinental and Northern Graphite 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 InterContinental with a short position of Northern Graphite. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and Northern Graphite.
Diversification Opportunities for InterContinental and Northern Graphite
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between InterContinental and Northern is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and Northern Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Graphite and InterContinental 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 InterContinental Hotels Group are associated (or correlated) with Northern Graphite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Graphite has no effect on the direction of InterContinental i.e., InterContinental and Northern Graphite go up and down completely randomly.
Pair Corralation between InterContinental and Northern Graphite
Assuming the 90 days trading horizon InterContinental is expected to generate 3.51 times less return on investment than Northern Graphite. But when comparing it to its historical volatility, InterContinental Hotels Group is 10.85 times less risky than Northern Graphite. It trades about 0.11 of its potential returns per unit of risk. Northern Graphite is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 41.00 in Northern Graphite on October 25, 2024 and sell it today you would lose (31.24) from holding Northern Graphite or give up 76.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
InterContinental Hotels Group vs. Northern Graphite
Performance |
| Timeline |
| InterContinental Hotels |
| Northern Graphite |
InterContinental and Northern Graphite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and Northern Graphite
The main advantage of trading using opposite InterContinental and Northern Graphite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, Northern Graphite 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 Northern Graphite will offset losses from the drop in Northern Graphite's long position.| InterContinental vs. Ribbon Communications | InterContinental vs. US FOODS HOLDING | InterContinental vs. TYSON FOODS A | InterContinental vs. Chengdu PUTIAN Telecommunications |
| Northern Graphite vs. Tencent Music Entertainment | Northern Graphite vs. GigaMedia | Northern Graphite vs. Casio Computer CoLtd | Northern Graphite vs. Universal Entertainment |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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