Correlation Between InterContinental and Reliance Steel
Can any of the company-specific risk be diversified away by investing in both InterContinental and Reliance Steel 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 Reliance Steel 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 Reliance Steel Aluminum, you can compare the effects of market volatilities on InterContinental and Reliance Steel 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 Reliance Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and Reliance Steel.
Diversification Opportunities for InterContinental and Reliance Steel
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between InterContinental and Reliance is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and Reliance Steel Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliance Steel Aluminum 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 Reliance Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliance Steel Aluminum has no effect on the direction of InterContinental i.e., InterContinental and Reliance Steel go up and down completely randomly.
Pair Corralation between InterContinental and Reliance Steel
Assuming the 90 days trading horizon InterContinental Hotels Group is expected to generate 0.79 times more return on investment than Reliance Steel. However, InterContinental Hotels Group is 1.26 times less risky than Reliance Steel. It trades about 0.13 of its potential returns per unit of risk. Reliance Steel Aluminum is currently generating about 0.06 per unit of risk. If you would invest 5,139 in InterContinental Hotels Group on September 15, 2024 and sell it today you would earn a total of 6,961 from holding InterContinental Hotels Group or generate 135.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
InterContinental Hotels Group vs. Reliance Steel Aluminum
Performance |
| Timeline |
| InterContinental Hotels |
| Reliance Steel Aluminum |
InterContinental and Reliance Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and Reliance Steel
The main advantage of trading using opposite InterContinental and Reliance Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, Reliance Steel 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 Reliance Steel will offset losses from the drop in Reliance Steel's long position.| InterContinental vs. ORMAT TECHNOLOGIES | InterContinental vs. ATRYS HEALTH SA | InterContinental vs. CVS Health | InterContinental vs. EHEALTH |
| Reliance Steel vs. Scandinavian Tobacco Group | Reliance Steel vs. NorAm Drilling AS | Reliance Steel vs. Park Hotels Resorts | Reliance Steel 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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