Correlation Between InterContinental and FuelCell Energy
Can any of the company-specific risk be diversified away by investing in both InterContinental and FuelCell Energy 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 FuelCell Energy 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 FuelCell Energy, you can compare the effects of market volatilities on InterContinental and FuelCell Energy 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 FuelCell Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and FuelCell Energy.
Diversification Opportunities for InterContinental and FuelCell Energy
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between InterContinental and FuelCell is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and FuelCell Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FuelCell Energy 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 FuelCell Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FuelCell Energy has no effect on the direction of InterContinental i.e., InterContinental and FuelCell Energy go up and down completely randomly.
Pair Corralation between InterContinental and FuelCell Energy
Assuming the 90 days trading horizon InterContinental Hotels Group is expected to generate 0.11 times more return on investment than FuelCell Energy. However, InterContinental Hotels Group is 9.15 times less risky than FuelCell Energy. It trades about 0.48 of its potential returns per unit of risk. FuelCell Energy is currently generating about 0.01 per unit of risk. If you would invest 857,600 in InterContinental Hotels Group on August 29, 2024 and sell it today you would earn a total of 129,200 from holding InterContinental Hotels Group or generate 15.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
InterContinental Hotels Group vs. FuelCell Energy
Performance |
| Timeline |
| InterContinental Hotels |
| FuelCell Energy |
InterContinental and FuelCell Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and FuelCell Energy
The main advantage of trading using opposite InterContinental and FuelCell Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, FuelCell Energy 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 FuelCell Energy will offset losses from the drop in FuelCell Energy's long position.| InterContinental vs. Ondine Biomedical | InterContinental vs. Europa Metals | InterContinental vs. Lendinvest PLC | InterContinental vs. Neometals |
| FuelCell Energy vs. InterContinental Hotels Group | FuelCell Energy vs. Alfa Financial Software | FuelCell Energy vs. PPHE Hotel Group | FuelCell Energy vs. Iron Mountain |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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