Correlation Between InterContinental and TELECOM ITALRISP
Can any of the company-specific risk be diversified away by investing in both InterContinental and TELECOM ITALRISP 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 TELECOM ITALRISP 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 TELECOM ITALRISP ADR10, you can compare the effects of market volatilities on InterContinental and TELECOM ITALRISP 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 TELECOM ITALRISP. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and TELECOM ITALRISP.
Diversification Opportunities for InterContinental and TELECOM ITALRISP
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between InterContinental and TELECOM is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and TELECOM ITALRISP ADR10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TELECOM ITALRISP ADR10 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 TELECOM ITALRISP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TELECOM ITALRISP ADR10 has no effect on the direction of InterContinental i.e., InterContinental and TELECOM ITALRISP go up and down completely randomly.
Pair Corralation between InterContinental and TELECOM ITALRISP
Assuming the 90 days trading horizon InterContinental Hotels Group is expected to generate 0.68 times more return on investment than TELECOM ITALRISP. However, InterContinental Hotels Group is 1.47 times less risky than TELECOM ITALRISP. It trades about 0.37 of its potential returns per unit of risk. TELECOM ITALRISP ADR10 is currently generating about 0.22 per unit of risk. If you would invest 11,800 in InterContinental Hotels Group on November 7, 2024 and sell it today you would earn a total of 1,100 from holding InterContinental Hotels Group or generate 9.32% 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. TELECOM ITALRISP ADR10
Performance |
| Timeline |
| InterContinental Hotels |
| TELECOM ITALRISP ADR10 |
InterContinental and TELECOM ITALRISP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and TELECOM ITALRISP
The main advantage of trading using opposite InterContinental and TELECOM ITALRISP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, TELECOM ITALRISP 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 TELECOM ITALRISP will offset losses from the drop in TELECOM ITALRISP's long position.| InterContinental vs. Insurance Australia Group | InterContinental vs. REVO INSURANCE SPA | InterContinental vs. Tencent Music Entertainment | InterContinental vs. PURE FOODS TASMANIA |
| TELECOM ITALRISP vs. T Mobile | TELECOM ITALRISP vs. China Mobile Limited | TELECOM ITALRISP vs. Verizon Communications | TELECOM ITALRISP vs. ATT Inc |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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