Correlation Between InterContinental and Columbia Sportswear
Can any of the company-specific risk be diversified away by investing in both InterContinental and Columbia Sportswear 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 Columbia Sportswear 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 Columbia Sportswear, you can compare the effects of market volatilities on InterContinental and Columbia Sportswear 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 Columbia Sportswear. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and Columbia Sportswear.
Diversification Opportunities for InterContinental and Columbia Sportswear
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between InterContinental and Columbia is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and Columbia Sportswear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Sportswear 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 Columbia Sportswear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Sportswear has no effect on the direction of InterContinental i.e., InterContinental and Columbia Sportswear go up and down completely randomly.
Pair Corralation between InterContinental and Columbia Sportswear
Assuming the 90 days trading horizon InterContinental Hotels Group is expected to generate 0.91 times more return on investment than Columbia Sportswear. However, InterContinental Hotels Group is 1.1 times less risky than Columbia Sportswear. It trades about -0.1 of its potential returns per unit of risk. Columbia Sportswear is currently generating about -0.28 per unit of risk. If you would invest 12,000 in InterContinental Hotels Group on October 16, 2024 and sell it today you would lose (200.00) from holding InterContinental Hotels Group or give up 1.67% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
InterContinental Hotels Group vs. Columbia Sportswear
Performance |
Timeline |
InterContinental Hotels |
Columbia Sportswear |
InterContinental and Columbia Sportswear Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with InterContinental and Columbia Sportswear
The main advantage of trading using opposite InterContinental and Columbia Sportswear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, Columbia Sportswear 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 Columbia Sportswear will offset losses from the drop in Columbia Sportswear's long position.InterContinental vs. BRIT AMER TOBACCO | InterContinental vs. Cincinnati Financial Corp | InterContinental vs. Discover Financial Services | InterContinental vs. IMPERIAL TOBACCO |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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