Correlation Between InterContinental and GOLD ROAD
Can any of the company-specific risk be diversified away by investing in both InterContinental and GOLD ROAD 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 GOLD ROAD 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 GOLD ROAD RES, you can compare the effects of market volatilities on InterContinental and GOLD ROAD 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 GOLD ROAD. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and GOLD ROAD.
Diversification Opportunities for InterContinental and GOLD ROAD
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between InterContinental and GOLD is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and GOLD ROAD RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOLD ROAD RES 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 GOLD ROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOLD ROAD RES has no effect on the direction of InterContinental i.e., InterContinental and GOLD ROAD go up and down completely randomly.
Pair Corralation between InterContinental and GOLD ROAD
Assuming the 90 days trading horizon InterContinental Hotels Group is expected to generate 0.9 times more return on investment than GOLD ROAD. However, InterContinental Hotels Group is 1.12 times less risky than GOLD ROAD. It trades about 0.43 of its potential returns per unit of risk. GOLD ROAD RES is currently generating about -0.05 per unit of risk. If you would invest 10,100 in InterContinental Hotels Group on September 3, 2024 and sell it today you would earn a total of 1,700 from holding InterContinental Hotels Group or generate 16.83% 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. GOLD ROAD RES
Performance |
| Timeline |
| InterContinental Hotels |
| GOLD ROAD RES |
InterContinental and GOLD ROAD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and GOLD ROAD
The main advantage of trading using opposite InterContinental and GOLD ROAD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, GOLD ROAD 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 GOLD ROAD will offset losses from the drop in GOLD ROAD's long position.| InterContinental vs. Hilton Worldwide Holdings | InterContinental vs. Hyatt Hotels | InterContinental vs. INTERCONT HOTELS | InterContinental vs. ACCOR SPADR NEW |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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