Correlation Between InterContinental and DICKS Sporting
Can any of the company-specific risk be diversified away by investing in both InterContinental and DICKS Sporting 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 DICKS Sporting 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 DICKS Sporting Goods, you can compare the effects of market volatilities on InterContinental and DICKS Sporting 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 DICKS Sporting. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and DICKS Sporting.
Diversification Opportunities for InterContinental and DICKS Sporting
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between InterContinental and DICKS is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and DICKS Sporting Goods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DICKS Sporting Goods 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 DICKS Sporting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DICKS Sporting Goods has no effect on the direction of InterContinental i.e., InterContinental and DICKS Sporting go up and down completely randomly.
Pair Corralation between InterContinental and DICKS Sporting
Assuming the 90 days trading horizon InterContinental is expected to generate 1.19 times less return on investment than DICKS Sporting. But when comparing it to its historical volatility, InterContinental Hotels Group is 1.77 times less risky than DICKS Sporting. It trades about 0.21 of its potential returns per unit of risk. DICKS Sporting Goods is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 18,665 in DICKS Sporting Goods on October 29, 2024 and sell it today you would earn a total of 4,520 from holding DICKS Sporting Goods or generate 24.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
InterContinental Hotels Group vs. DICKS Sporting Goods
Performance |
| Timeline |
| InterContinental Hotels |
| DICKS Sporting Goods |
InterContinental and DICKS Sporting Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and DICKS Sporting
The main advantage of trading using opposite InterContinental and DICKS Sporting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, DICKS Sporting 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 DICKS Sporting will offset losses from the drop in DICKS Sporting's long position.| InterContinental vs. Lery Seafood Group | InterContinental vs. Austevoll Seafood ASA | InterContinental vs. Carsales | InterContinental vs. MTY Food Group |
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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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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