Correlation Between InterContinental and Monument Mining
Can any of the company-specific risk be diversified away by investing in both InterContinental and Monument Mining 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 Monument Mining 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 Monument Mining Limited, you can compare the effects of market volatilities on InterContinental and Monument Mining 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 Monument Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and Monument Mining.
Diversification Opportunities for InterContinental and Monument Mining
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between InterContinental and Monument is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and Monument Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monument Mining 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 Monument Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monument Mining has no effect on the direction of InterContinental i.e., InterContinental and Monument Mining go up and down completely randomly.
Pair Corralation between InterContinental and Monument Mining
Assuming the 90 days trading horizon InterContinental is expected to generate 3.15 times less return on investment than Monument Mining. But when comparing it to its historical volatility, InterContinental Hotels Group is 3.27 times less risky than Monument Mining. It trades about 0.12 of its potential returns per unit of risk. Monument Mining Limited is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 18.00 in Monument Mining Limited on October 30, 2024 and sell it today you would earn a total of 3.00 from holding Monument Mining Limited or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
InterContinental Hotels Group vs. Monument Mining Limited
Performance |
| Timeline |
| InterContinental Hotels |
| Monument Mining |
InterContinental and Monument Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and Monument Mining
The main advantage of trading using opposite InterContinental and Monument Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, Monument Mining 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 Monument Mining will offset losses from the drop in Monument Mining's long position.| InterContinental vs. MPH Health Care | InterContinental vs. National Health Investors | InterContinental vs. Cardinal Health | InterContinental vs. CLOVER HEALTH INV |
| Monument Mining vs. De Grey Mining | Monument Mining vs. FIREWEED METALS P | Monument Mining vs. SERI INDUSTRIAL EO | Monument Mining vs. ARDAGH METAL PACDL 0001 |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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