Correlation Between InterContinental and Gaming
Can any of the company-specific risk be diversified away by investing in both InterContinental and Gaming 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 Gaming 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 Gaming and Leisure, you can compare the effects of market volatilities on InterContinental and Gaming 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 Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and Gaming.
Diversification Opportunities for InterContinental and Gaming
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between InterContinental and Gaming is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and Gaming and Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaming and Leisure 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 Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaming and Leisure has no effect on the direction of InterContinental i.e., InterContinental and Gaming go up and down completely randomly.
Pair Corralation between InterContinental and Gaming
Assuming the 90 days trading horizon InterContinental Hotels Group is expected to generate 0.62 times more return on investment than Gaming. However, InterContinental Hotels Group is 1.61 times less risky than Gaming. It trades about 0.37 of its potential returns per unit of risk. Gaming and Leisure is currently generating about -0.01 per unit of risk. If you would invest 11,800 in InterContinental Hotels Group on November 6, 2024 and sell it today you would earn a total of 1,100 from holding InterContinental Hotels Group or generate 9.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
InterContinental Hotels Group vs. Gaming and Leisure
Performance |
| Timeline |
| InterContinental Hotels |
| Gaming and Leisure |
InterContinental and Gaming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and Gaming
The main advantage of trading using opposite InterContinental and Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, Gaming 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 Gaming will offset losses from the drop in Gaming's long position.| InterContinental vs. SBM OFFSHORE | InterContinental vs. Singapore Telecommunications Limited | InterContinental vs. TITAN MACHINERY | InterContinental vs. AGRICULTBK HADR25 YC |
| Gaming vs. Columbia Sportswear | Gaming vs. G III APPAREL GROUP | Gaming vs. URBAN OUTFITTERS | Gaming vs. BRAEMAR HOTELS RES |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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