Correlation Between InterContinental and Liberty Media
Can any of the company-specific risk be diversified away by investing in both InterContinental and Liberty Media 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 Liberty Media 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 Liberty Media Corp, you can compare the effects of market volatilities on InterContinental and Liberty Media 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 Liberty Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and Liberty Media.
Diversification Opportunities for InterContinental and Liberty Media
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between InterContinental and Liberty is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and Liberty Media Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Media Corp 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 Liberty Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Media Corp has no effect on the direction of InterContinental i.e., InterContinental and Liberty Media go up and down completely randomly.
Pair Corralation between InterContinental and Liberty Media
Assuming the 90 days trading horizon InterContinental Hotels Group is expected to generate 0.84 times more return on investment than Liberty Media. However, InterContinental Hotels Group is 1.19 times less risky than Liberty Media. It trades about 0.16 of its potential returns per unit of risk. Liberty Media Corp is currently generating about 0.1 per unit of risk. If you would invest 980,000 in InterContinental Hotels Group on October 30, 2024 and sell it today you would earn a total of 63,000 from holding InterContinental Hotels Group or generate 6.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.5% |
| Values | Daily Returns |
InterContinental Hotels Group vs. Liberty Media Corp
Performance |
| Timeline |
| InterContinental Hotels |
| Liberty Media Corp |
InterContinental and Liberty Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and Liberty Media
The main advantage of trading using opposite InterContinental and Liberty Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, Liberty Media 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 Liberty Media will offset losses from the drop in Liberty Media's long position.| InterContinental vs. Iron Mountain | InterContinental vs. Diversified Energy | InterContinental vs. Seche Environnement SA | InterContinental vs. Foresight Environmental Infrastructure |
| Liberty Media vs. Datagroup SE | Liberty Media vs. Rosslyn Data Technologies | Liberty Media vs. Telecom Italia SpA | Liberty Media vs. Charter Communications Cl |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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