Correlation Between InterContinental and Arrow Electronics
Can any of the company-specific risk be diversified away by investing in both InterContinental and Arrow Electronics 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 Arrow Electronics 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 Arrow Electronics, you can compare the effects of market volatilities on InterContinental and Arrow Electronics 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 Arrow Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and Arrow Electronics.
Diversification Opportunities for InterContinental and Arrow Electronics
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between InterContinental and Arrow is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics 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 Arrow Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Electronics has no effect on the direction of InterContinental i.e., InterContinental and Arrow Electronics go up and down completely randomly.
Pair Corralation between InterContinental and Arrow Electronics
Assuming the 90 days trading horizon InterContinental Hotels Group is expected to generate 0.83 times more return on investment than Arrow Electronics. However, InterContinental Hotels Group is 1.21 times less risky than Arrow Electronics. It trades about 0.1 of its potential returns per unit of risk. Arrow Electronics is currently generating about 0.01 per unit of risk. If you would invest 6,196 in InterContinental Hotels Group on October 17, 2024 and sell it today you would earn a total of 5,804 from holding InterContinental Hotels Group or generate 93.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
InterContinental Hotels Group vs. Arrow Electronics
Performance |
| Timeline |
| InterContinental Hotels |
| Arrow Electronics |
InterContinental and Arrow Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and Arrow Electronics
The main advantage of trading using opposite InterContinental and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, Arrow Electronics 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 Arrow Electronics will offset losses from the drop in Arrow Electronics' long position.| InterContinental vs. Vulcan Materials | InterContinental vs. Applied Materials | InterContinental vs. Summit Materials | InterContinental vs. Materialise NV |
| Arrow Electronics vs. InterContinental Hotels Group | Arrow Electronics vs. INDOFOOD AGRI RES | Arrow Electronics vs. Tyson Foods | Arrow Electronics vs. PLANT VEDA FOODS |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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