Correlation Between InterContinental and Allegheny Technologies
Can any of the company-specific risk be diversified away by investing in both InterContinental and Allegheny Technologies 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 Allegheny Technologies 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 Allegheny Technologies Incorporated, you can compare the effects of market volatilities on InterContinental and Allegheny Technologies 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 Allegheny Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and Allegheny Technologies.
Diversification Opportunities for InterContinental and Allegheny Technologies
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between InterContinental and Allegheny is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and Allegheny Technologies Incorpo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegheny Technologies 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 Allegheny Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegheny Technologies has no effect on the direction of InterContinental i.e., InterContinental and Allegheny Technologies go up and down completely randomly.
Pair Corralation between InterContinental and Allegheny Technologies
Assuming the 90 days trading horizon InterContinental Hotels Group is expected to generate 0.58 times more return on investment than Allegheny Technologies. However, InterContinental Hotels Group is 1.72 times less risky than Allegheny Technologies. It trades about 0.12 of its potential returns per unit of risk. Allegheny Technologies Incorporated is currently generating about 0.05 per unit of risk. If you would invest 6,100 in InterContinental Hotels Group on November 7, 2024 and sell it today you would earn a total of 6,800 from holding InterContinental Hotels Group or generate 111.48% 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. Allegheny Technologies Incorpo
Performance |
| Timeline |
| InterContinental Hotels |
| Allegheny Technologies |
InterContinental and Allegheny Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and Allegheny Technologies
The main advantage of trading using opposite InterContinental and Allegheny Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, Allegheny Technologies 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 Allegheny Technologies will offset losses from the drop in Allegheny Technologies' long position.| InterContinental vs. SBM OFFSHORE | InterContinental vs. Singapore Telecommunications Limited | InterContinental vs. TITAN MACHINERY | InterContinental vs. AGRICULTBK HADR25 YC |
| Allegheny Technologies vs. GRENKELEASING Dusseldorf | Allegheny Technologies vs. ALBIS LEASING AG | Allegheny Technologies vs. The Hanover Insurance | Allegheny Technologies vs. HANOVER INSURANCE |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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