Correlation Between InterContinental and Brinker International
Can any of the company-specific risk be diversified away by investing in both InterContinental and Brinker International 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 Brinker International 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 Brinker International, you can compare the effects of market volatilities on InterContinental and Brinker International 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 Brinker International. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and Brinker International.
Diversification Opportunities for InterContinental and Brinker International
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between InterContinental and Brinker is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and Brinker International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brinker International 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 Brinker International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brinker International has no effect on the direction of InterContinental i.e., InterContinental and Brinker International go up and down completely randomly.
Pair Corralation between InterContinental and Brinker International
Assuming the 90 days trading horizon InterContinental is expected to generate 5.99 times less return on investment than Brinker International. But when comparing it to its historical volatility, InterContinental Hotels Group is 3.07 times less risky than Brinker International. It trades about 0.22 of its potential returns per unit of risk. Brinker International is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 12,800 in Brinker International on November 2, 2024 and sell it today you would earn a total of 5,000 from holding Brinker International or generate 39.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
InterContinental Hotels Group vs. Brinker International
Performance |
| Timeline |
| InterContinental Hotels |
| Brinker International |
InterContinental and Brinker International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and Brinker International
The main advantage of trading using opposite InterContinental and Brinker International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, Brinker International 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 Brinker International will offset losses from the drop in Brinker International's long position.| InterContinental vs. Gaztransport Technigaz SA | InterContinental vs. Align Technology | InterContinental vs. MACOM Technology Solutions | InterContinental vs. Cognizant Technology Solutions |
| Brinker International vs. CarsalesCom | Brinker International vs. Waste Management | Brinker International vs. De Grey Mining | Brinker International vs. MCEWEN MINING INC |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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