Correlation Between InterContinental and American Eagle
Can any of the company-specific risk be diversified away by investing in both InterContinental and American Eagle 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 American Eagle 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 American Eagle Outfitters, you can compare the effects of market volatilities on InterContinental and American Eagle 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 American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and American Eagle.
Diversification Opportunities for InterContinental and American Eagle
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between InterContinental and American is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and American Eagle Outfitters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Eagle Outfitters 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 American Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Eagle Outfitters has no effect on the direction of InterContinental i.e., InterContinental and American Eagle go up and down completely randomly.
Pair Corralation between InterContinental and American Eagle
Assuming the 90 days trading horizon InterContinental Hotels Group is expected to generate 0.92 times more return on investment than American Eagle. However, InterContinental Hotels Group is 1.09 times less risky than American Eagle. It trades about -0.14 of its potential returns per unit of risk. American Eagle Outfitters is currently generating about -0.51 per unit of risk. If you would invest 12,400 in InterContinental Hotels Group on November 28, 2024 and sell it today you would lose (700.00) from holding InterContinental Hotels Group or give up 5.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
InterContinental Hotels Group vs. American Eagle Outfitters
Performance |
| Timeline |
| InterContinental Hotels |
| American Eagle Outfitters |
InterContinental and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and American Eagle
The main advantage of trading using opposite InterContinental and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, American Eagle 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 American Eagle will offset losses from the drop in American Eagle's long position.| InterContinental vs. CLOVER HEALTH INV | InterContinental vs. SYSTEMAIR AB | InterContinental vs. Japan Tobacco | InterContinental vs. OPKO HEALTH |
| American Eagle vs. BE Semiconductor Industries | American Eagle vs. AEGEAN AIRLINES | American Eagle vs. Japan Tobacco | American Eagle vs. China Southern Airlines |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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