Correlation Between InterContinental and REGAL HOTEL
Can any of the company-specific risk be diversified away by investing in both InterContinental and REGAL HOTEL 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 REGAL HOTEL 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 REGAL HOTEL INTL, you can compare the effects of market volatilities on InterContinental and REGAL HOTEL 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 REGAL HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and REGAL HOTEL.
Diversification Opportunities for InterContinental and REGAL HOTEL
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between InterContinental and REGAL is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and REGAL HOTEL INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REGAL HOTEL INTL 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 REGAL HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REGAL HOTEL INTL has no effect on the direction of InterContinental i.e., InterContinental and REGAL HOTEL go up and down completely randomly.
Pair Corralation between InterContinental and REGAL HOTEL
Assuming the 90 days trading horizon InterContinental Hotels Group is expected to under-perform the REGAL HOTEL. But the stock apears to be less risky and, when comparing its historical volatility, InterContinental Hotels Group is 2.99 times less risky than REGAL HOTEL. The stock trades about -0.19 of its potential returns per unit of risk. The REGAL HOTEL INTL is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 28.00 in REGAL HOTEL INTL on October 10, 2024 and sell it today you would earn a total of 1.00 from holding REGAL HOTEL INTL or generate 3.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
InterContinental Hotels Group vs. REGAL HOTEL INTL
Performance |
| Timeline |
| InterContinental Hotels |
| REGAL HOTEL INTL |
InterContinental and REGAL HOTEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and REGAL HOTEL
The main advantage of trading using opposite InterContinental and REGAL HOTEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, REGAL HOTEL 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 REGAL HOTEL will offset losses from the drop in REGAL HOTEL's long position.| InterContinental vs. Host Hotels Resorts | InterContinental vs. Choice Hotels International | InterContinental vs. Khiron Life Sciences | InterContinental vs. ALGOMA STEEL GROUP |
| REGAL HOTEL vs. Insteel Industries | REGAL HOTEL vs. Constellation Software | REGAL HOTEL vs. Unity Software | REGAL HOTEL vs. Magic Software Enterprises |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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