Correlation Between InterContinental and PennantPark Investment
Can any of the company-specific risk be diversified away by investing in both InterContinental and PennantPark Investment 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 PennantPark Investment 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 PennantPark Investment, you can compare the effects of market volatilities on InterContinental and PennantPark Investment 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 PennantPark Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and PennantPark Investment.
Diversification Opportunities for InterContinental and PennantPark Investment
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between InterContinental and PennantPark is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment 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 PennantPark Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Investment has no effect on the direction of InterContinental i.e., InterContinental and PennantPark Investment go up and down completely randomly.
Pair Corralation between InterContinental and PennantPark Investment
Assuming the 90 days trading horizon InterContinental is expected to generate 53.38 times less return on investment than PennantPark Investment. But when comparing it to its historical volatility, InterContinental Hotels Group is 2.27 times less risky than PennantPark Investment. It trades about 0.0 of its potential returns per unit of risk. PennantPark Investment is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 670.00 in PennantPark Investment on October 16, 2024 and sell it today you would earn a total of 28.00 from holding PennantPark Investment or generate 4.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
InterContinental Hotels Group vs. PennantPark Investment
Performance |
| Timeline |
| InterContinental Hotels |
| PennantPark Investment |
InterContinental and PennantPark Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and PennantPark Investment
The main advantage of trading using opposite InterContinental and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, PennantPark Investment 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 PennantPark Investment will offset losses from the drop in PennantPark Investment's long position.| InterContinental vs. Sims Metal Management | InterContinental vs. PLAYSTUDIOS A DL 0001 | InterContinental vs. CeoTronics AG | InterContinental vs. USWE SPORTS AB |
| PennantPark Investment vs. NH HOTEL GROUP | PennantPark Investment vs. PPHE HOTEL GROUP | PennantPark Investment vs. InterContinental Hotels Group | PennantPark Investment vs. Choice Hotels International |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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