Correlation Between InterContinental and International Business
Can any of the company-specific risk be diversified away by investing in both InterContinental and International Business 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 International Business 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 International Business Machines, you can compare the effects of market volatilities on InterContinental and International Business 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 International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and International Business.
Diversification Opportunities for InterContinental and International Business
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between InterContinental and International is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business 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 International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of InterContinental i.e., InterContinental and International Business go up and down completely randomly.
Pair Corralation between InterContinental and International Business
Assuming the 90 days trading horizon InterContinental Hotels Group is expected to generate 0.91 times more return on investment than International Business. However, InterContinental Hotels Group is 1.1 times less risky than International Business. It trades about 0.27 of its potential returns per unit of risk. International Business Machines is currently generating about 0.07 per unit of risk. If you would invest 12,000 in InterContinental Hotels Group on October 26, 2024 and sell it today you would earn a total of 700.00 from holding InterContinental Hotels Group or generate 5.83% 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. International Business Machine
Performance |
| Timeline |
| InterContinental Hotels |
| International Business |
InterContinental and International Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and International Business
The main advantage of trading using opposite InterContinental and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.| InterContinental vs. Marriott International | InterContinental vs. Hilton Worldwide Holdings | InterContinental vs. H World Group | InterContinental vs. Hyatt Hotels |
| International Business vs. ADDUS HOMECARE | International Business vs. American Homes 4 | International Business vs. NH HOTEL GROUP | International Business vs. InterContinental Hotels Group |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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