Correlation Between InterContinental and SPDR Gold
Can any of the company-specific risk be diversified away by investing in both InterContinental and SPDR Gold 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 SPDR Gold 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 SPDR Gold Shares, you can compare the effects of market volatilities on InterContinental and SPDR Gold 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 SPDR Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and SPDR Gold.
Diversification Opportunities for InterContinental and SPDR Gold
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between InterContinental and SPDR is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and SPDR Gold Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Gold Shares 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 SPDR Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Gold Shares has no effect on the direction of InterContinental i.e., InterContinental and SPDR Gold go up and down completely randomly.
Pair Corralation between InterContinental and SPDR Gold
Assuming the 90 days trading horizon InterContinental Hotels Group is expected to generate 1.56 times more return on investment than SPDR Gold. However, InterContinental is 1.56 times more volatile than SPDR Gold Shares. It trades about 0.12 of its potential returns per unit of risk. SPDR Gold Shares is currently generating about 0.15 per unit of risk. If you would invest 8,161 in InterContinental Hotels Group on September 14, 2024 and sell it today you would earn a total of 3,939 from holding InterContinental Hotels Group or generate 48.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
InterContinental Hotels Group vs. SPDR Gold Shares
Performance |
| Timeline |
| InterContinental Hotels |
| SPDR Gold Shares |
InterContinental and SPDR Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and SPDR Gold
The main advantage of trading using opposite InterContinental and SPDR Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, SPDR Gold 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 SPDR Gold will offset losses from the drop in SPDR Gold's long position.| InterContinental vs. Performance Food Group | InterContinental vs. TYSON FOODS A | InterContinental vs. Iridium Communications | InterContinental vs. National Beverage Corp |
| SPDR Gold vs. USWE SPORTS AB | SPDR Gold vs. ePlay Digital | SPDR Gold vs. TITANIUM TRANSPORTGROUP | SPDR Gold vs. Sixt Leasing 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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