Correlation Between InterContinental and Fevertree Drinks
Can any of the company-specific risk be diversified away by investing in both InterContinental and Fevertree Drinks 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 Fevertree Drinks 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 Fevertree Drinks PLC, you can compare the effects of market volatilities on InterContinental and Fevertree Drinks 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 Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and Fevertree Drinks.
Diversification Opportunities for InterContinental and Fevertree Drinks
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between InterContinental and Fevertree is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and Fevertree Drinks PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fevertree Drinks PLC 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 Fevertree Drinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fevertree Drinks PLC has no effect on the direction of InterContinental i.e., InterContinental and Fevertree Drinks go up and down completely randomly.
Pair Corralation between InterContinental and Fevertree Drinks
Assuming the 90 days trading horizon InterContinental Hotels Group is expected to generate 0.64 times more return on investment than Fevertree Drinks. However, InterContinental Hotels Group is 1.56 times less risky than Fevertree Drinks. It trades about 0.18 of its potential returns per unit of risk. Fevertree Drinks PLC is currently generating about -0.08 per unit of risk. If you would invest 12,000 in InterContinental Hotels Group on October 27, 2024 and sell it today you would earn a total of 500.00 from holding InterContinental Hotels Group or generate 4.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
InterContinental Hotels Group vs. Fevertree Drinks PLC
Performance |
| Timeline |
| InterContinental Hotels |
| Fevertree Drinks PLC |
InterContinental and Fevertree Drinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and Fevertree Drinks
The main advantage of trading using opposite InterContinental and Fevertree Drinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, Fevertree Drinks 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 Fevertree Drinks will offset losses from the drop in Fevertree Drinks' long position.| InterContinental vs. AGNC INVESTMENT | InterContinental vs. HK Electric Investments | InterContinental vs. Addus HomeCare | InterContinental vs. Haverty Furniture Companies |
| Fevertree Drinks vs. GALENA MINING LTD | Fevertree Drinks vs. ARDAGH METAL PACDL 0001 | Fevertree Drinks vs. Perseus Mining Limited | Fevertree Drinks vs. Ringmetall SE |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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