Correlation Between InterContinental and Titan Machinery
Can any of the company-specific risk be diversified away by investing in both InterContinental and Titan Machinery 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 Titan Machinery 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 Titan Machinery, you can compare the effects of market volatilities on InterContinental and Titan Machinery 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 Titan Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and Titan Machinery.
Diversification Opportunities for InterContinental and Titan Machinery
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between InterContinental and Titan is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and Titan Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Machinery 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 Titan Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan Machinery has no effect on the direction of InterContinental i.e., InterContinental and Titan Machinery go up and down completely randomly.
Pair Corralation between InterContinental and Titan Machinery
Assuming the 90 days trading horizon InterContinental Hotels Group is expected to generate 0.46 times more return on investment than Titan Machinery. However, InterContinental Hotels Group is 2.16 times less risky than Titan Machinery. It trades about 0.36 of its potential returns per unit of risk. Titan Machinery is currently generating about 0.08 per unit of risk. If you would invest 10,300 in InterContinental Hotels Group on August 28, 2024 and sell it today you would earn a total of 1,400 from holding InterContinental Hotels Group or generate 13.59% 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. Titan Machinery
Performance |
| Timeline |
| InterContinental Hotels |
| Titan Machinery |
InterContinental and Titan Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and Titan Machinery
The main advantage of trading using opposite InterContinental and Titan Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, Titan Machinery 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 Titan Machinery will offset losses from the drop in Titan Machinery's long position.| InterContinental vs. COMMERCIAL VEHICLE | InterContinental vs. ITALIAN WINE BRANDS | InterContinental vs. Zijin Mining Group | InterContinental vs. Perseus Mining Limited |
| Titan Machinery vs. Superior Plus Corp | Titan Machinery vs. NMI Holdings | Titan Machinery vs. Origin Agritech | Titan Machinery vs. SIVERS SEMICONDUCTORS AB |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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