Correlation Between InterContinental and MGIC INVESTMENT
Can any of the company-specific risk be diversified away by investing in both InterContinental and MGIC INVESTMENT 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 MGIC INVESTMENT 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 MGIC INVESTMENT, you can compare the effects of market volatilities on InterContinental and MGIC INVESTMENT 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 MGIC INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and MGIC INVESTMENT.
Diversification Opportunities for InterContinental and MGIC INVESTMENT
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between InterContinental and MGIC is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and MGIC INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC INVESTMENT 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 MGIC INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGIC INVESTMENT has no effect on the direction of InterContinental i.e., InterContinental and MGIC INVESTMENT go up and down completely randomly.
Pair Corralation between InterContinental and MGIC INVESTMENT
Assuming the 90 days trading horizon InterContinental Hotels Group is expected to generate 1.11 times more return on investment than MGIC INVESTMENT. However, InterContinental is 1.11 times more volatile than MGIC INVESTMENT. It trades about 0.1 of its potential returns per unit of risk. MGIC INVESTMENT is currently generating about 0.11 per unit of risk. If you would invest 6,148 in InterContinental Hotels Group on October 13, 2024 and sell it today you would earn a total of 5,652 from holding InterContinental Hotels Group or generate 91.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
InterContinental Hotels Group vs. MGIC INVESTMENT
Performance |
| Timeline |
| InterContinental Hotels |
| MGIC INVESTMENT |
InterContinental and MGIC INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and MGIC INVESTMENT
The main advantage of trading using opposite InterContinental and MGIC INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, MGIC INVESTMENT 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 MGIC INVESTMENT will offset losses from the drop in MGIC INVESTMENT's long position.| InterContinental vs. Osisko Metals | InterContinental vs. Nippon Light Metal | InterContinental vs. FIREWEED METALS P | InterContinental vs. Global Ship Lease |
| MGIC INVESTMENT vs. JAPAN AIRLINES | MGIC INVESTMENT vs. Aegean Airlines SA | MGIC INVESTMENT vs. EBRO FOODS | MGIC INVESTMENT vs. American Airlines 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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