Correlation Between InterContinental and Adtalem Global
Can any of the company-specific risk be diversified away by investing in both InterContinental and Adtalem Global 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 Adtalem Global 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 Adtalem Global Education, you can compare the effects of market volatilities on InterContinental and Adtalem Global 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 Adtalem Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and Adtalem Global.
Diversification Opportunities for InterContinental and Adtalem Global
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between InterContinental and Adtalem is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and Adtalem Global Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adtalem Global Education 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 Adtalem Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adtalem Global Education has no effect on the direction of InterContinental i.e., InterContinental and Adtalem Global go up and down completely randomly.
Pair Corralation between InterContinental and Adtalem Global
Assuming the 90 days trading horizon InterContinental is expected to generate 1.06 times less return on investment than Adtalem Global. But when comparing it to its historical volatility, InterContinental Hotels Group is 1.66 times less risky than Adtalem Global. It trades about 0.25 of its potential returns per unit of risk. Adtalem Global Education is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 6,700 in Adtalem Global Education on November 3, 2024 and sell it today you would earn a total of 3,500 from holding Adtalem Global Education or generate 52.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
InterContinental Hotels Group vs. Adtalem Global Education
Performance |
| Timeline |
| InterContinental Hotels |
| Adtalem Global Education |
InterContinental and Adtalem Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and Adtalem Global
The main advantage of trading using opposite InterContinental and Adtalem Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, Adtalem Global 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 Adtalem Global will offset losses from the drop in Adtalem Global's long position.| InterContinental vs. Marriott International | InterContinental vs. Hilton Worldwide Holdings | InterContinental vs. H World Group | InterContinental vs. Hyatt Hotels |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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