Correlation Between InterContinental and SWISS WATER
Can any of the company-specific risk be diversified away by investing in both InterContinental and SWISS WATER 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 SWISS WATER 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 SWISS WATER DECAFFCOFFEE, you can compare the effects of market volatilities on InterContinental and SWISS WATER 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 SWISS WATER. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and SWISS WATER.
Diversification Opportunities for InterContinental and SWISS WATER
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between InterContinental and SWISS is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and SWISS WATER DECAFFCOFFEE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SWISS WATER DECAFFCOFFEE 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 SWISS WATER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SWISS WATER DECAFFCOFFEE has no effect on the direction of InterContinental i.e., InterContinental and SWISS WATER go up and down completely randomly.
Pair Corralation between InterContinental and SWISS WATER
Assuming the 90 days trading horizon InterContinental Hotels Group is expected to generate 0.52 times more return on investment than SWISS WATER. However, InterContinental Hotels Group is 1.91 times less risky than SWISS WATER. It trades about 0.16 of its potential returns per unit of risk. SWISS WATER DECAFFCOFFEE is currently generating about -0.01 per unit of risk. If you would invest 10,200 in InterContinental Hotels Group on October 14, 2024 and sell it today you would earn a total of 1,600 from holding InterContinental Hotels Group or generate 15.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
InterContinental Hotels Group vs. SWISS WATER DECAFFCOFFEE
Performance |
| Timeline |
| InterContinental Hotels |
| SWISS WATER DECAFFCOFFEE |
InterContinental and SWISS WATER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and SWISS WATER
The main advantage of trading using opposite InterContinental and SWISS WATER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, SWISS WATER 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 SWISS WATER will offset losses from the drop in SWISS WATER's long position.| InterContinental vs. ALERION CLEANPOWER | InterContinental vs. ARROW ELECTRONICS | InterContinental vs. ULTRA CLEAN HLDGS | InterContinental vs. Teradata Corp |
| SWISS WATER vs. Choice Hotels International | SWISS WATER vs. MELIA HOTELS | SWISS WATER vs. NH HOTEL GROUP | SWISS WATER vs. InterContinental Hotels Group |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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