Correlation Between InterContinental and QUEEN S
Can any of the company-specific risk be diversified away by investing in both InterContinental and QUEEN S 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 QUEEN S 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 QUEEN S ROAD, you can compare the effects of market volatilities on InterContinental and QUEEN S 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 QUEEN S. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and QUEEN S.
Diversification Opportunities for InterContinental and QUEEN S
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between InterContinental and QUEEN is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and QUEEN S ROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QUEEN S ROAD 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 QUEEN S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QUEEN S ROAD has no effect on the direction of InterContinental i.e., InterContinental and QUEEN S go up and down completely randomly.
Pair Corralation between InterContinental and QUEEN S
Assuming the 90 days trading horizon InterContinental Hotels Group is expected to generate 0.4 times more return on investment than QUEEN S. However, InterContinental Hotels Group is 2.53 times less risky than QUEEN S. It trades about 0.26 of its potential returns per unit of risk. QUEEN S ROAD is currently generating about 0.08 per unit of risk. If you would invest 9,950 in InterContinental Hotels Group on August 30, 2024 and sell it today you would earn a total of 1,850 from holding InterContinental Hotels Group or generate 18.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
InterContinental Hotels Group vs. QUEEN S ROAD
Performance |
| Timeline |
| InterContinental Hotels |
| QUEEN S ROAD |
InterContinental and QUEEN S Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and QUEEN S
The main advantage of trading using opposite InterContinental and QUEEN S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, QUEEN S 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 QUEEN S will offset losses from the drop in QUEEN S's long position.| InterContinental vs. AECOM TECHNOLOGY | InterContinental vs. Amkor Technology | InterContinental vs. QBE Insurance Group | InterContinental vs. Align Technology |
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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