Correlation Between InterContinental and Veolia Environnement
Can any of the company-specific risk be diversified away by investing in both InterContinental and Veolia Environnement 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 Veolia Environnement 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 Veolia Environnement SA, you can compare the effects of market volatilities on InterContinental and Veolia Environnement 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 Veolia Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and Veolia Environnement.
Diversification Opportunities for InterContinental and Veolia Environnement
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between InterContinental and Veolia is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and Veolia Environnement SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veolia Environnement 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 Veolia Environnement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veolia Environnement has no effect on the direction of InterContinental i.e., InterContinental and Veolia Environnement go up and down completely randomly.
Pair Corralation between InterContinental and Veolia Environnement
Assuming the 90 days trading horizon InterContinental Hotels Group is expected to generate 1.13 times more return on investment than Veolia Environnement. However, InterContinental is 1.13 times more volatile than Veolia Environnement SA. It trades about 0.47 of its potential returns per unit of risk. Veolia Environnement SA is currently generating about -0.17 per unit of risk. If you would invest 10,100 in InterContinental Hotels Group on September 5, 2024 and sell it today you would earn a total of 2,000 from holding InterContinental Hotels Group or generate 19.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
InterContinental Hotels Group vs. Veolia Environnement SA
Performance |
| Timeline |
| InterContinental Hotels |
| Veolia Environnement |
InterContinental and Veolia Environnement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and Veolia Environnement
The main advantage of trading using opposite InterContinental and Veolia Environnement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, Veolia Environnement 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 Veolia Environnement will offset losses from the drop in Veolia Environnement's long position.| InterContinental vs. AAC TECHNOLOGHLDGADR | InterContinental vs. Lion Biotechnologies | InterContinental vs. Insurance Australia Group | InterContinental vs. Uber Technologies |
| Veolia Environnement vs. InterContinental Hotels Group | Veolia Environnement vs. Wyndham Hotels Resorts | Veolia Environnement vs. Park Hotels Resorts | Veolia Environnement vs. Westlake Chemical |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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