Correlation Between InterContinental and BRAEMAR HOTELS
Can any of the company-specific risk be diversified away by investing in both InterContinental and BRAEMAR HOTELS 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 BRAEMAR HOTELS 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 BRAEMAR HOTELS RES, you can compare the effects of market volatilities on InterContinental and BRAEMAR HOTELS 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 BRAEMAR HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and BRAEMAR HOTELS.
Diversification Opportunities for InterContinental and BRAEMAR HOTELS
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between InterContinental and BRAEMAR is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and BRAEMAR HOTELS RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRAEMAR HOTELS RES 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 BRAEMAR HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRAEMAR HOTELS RES has no effect on the direction of InterContinental i.e., InterContinental and BRAEMAR HOTELS go up and down completely randomly.
Pair Corralation between InterContinental and BRAEMAR HOTELS
Assuming the 90 days trading horizon InterContinental Hotels Group is expected to generate 0.3 times more return on investment than BRAEMAR HOTELS. However, InterContinental Hotels Group is 3.34 times less risky than BRAEMAR HOTELS. It trades about -0.19 of its potential returns per unit of risk. BRAEMAR HOTELS RES is currently generating about -0.19 per unit of risk. If you would invest 12,200 in InterContinental Hotels Group on October 10, 2024 and sell it today you would lose (400.00) from holding InterContinental Hotels Group or give up 3.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
InterContinental Hotels Group vs. BRAEMAR HOTELS RES
Performance |
| Timeline |
| InterContinental Hotels |
| BRAEMAR HOTELS RES |
InterContinental and BRAEMAR HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and BRAEMAR HOTELS
The main advantage of trading using opposite InterContinental and BRAEMAR HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, BRAEMAR HOTELS 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 BRAEMAR HOTELS will offset losses from the drop in BRAEMAR HOTELS's long position.| InterContinental vs. Host Hotels Resorts | InterContinental vs. Choice Hotels International | InterContinental vs. Khiron Life Sciences | InterContinental vs. ALGOMA STEEL GROUP |
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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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