Correlation Between InterContinental and Ross Stores
Can any of the company-specific risk be diversified away by investing in both InterContinental and Ross Stores 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 Ross Stores 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 Ross Stores, you can compare the effects of market volatilities on InterContinental and Ross Stores 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 Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and Ross Stores.
Diversification Opportunities for InterContinental and Ross Stores
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between InterContinental and Ross is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores 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 Ross Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ross Stores has no effect on the direction of InterContinental i.e., InterContinental and Ross Stores go up and down completely randomly.
Pair Corralation between InterContinental and Ross Stores
Assuming the 90 days trading horizon InterContinental Hotels Group is expected to generate 0.9 times more return on investment than Ross Stores. However, InterContinental Hotels Group is 1.11 times less risky than Ross Stores. It trades about 0.1 of its potential returns per unit of risk. Ross Stores is currently generating about 0.05 per unit of risk. If you would invest 543,306 in InterContinental Hotels Group on October 11, 2024 and sell it today you would earn a total of 434,694 from holding InterContinental Hotels Group or generate 80.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.19% |
| Values | Daily Returns |
InterContinental Hotels Group vs. Ross Stores
Performance |
| Timeline |
| InterContinental Hotels |
| Ross Stores |
InterContinental and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and Ross Stores
The main advantage of trading using opposite InterContinental and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, Ross Stores 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 Ross Stores will offset losses from the drop in Ross Stores' long position.| InterContinental vs. Roebuck Food Group | InterContinental vs. Indutrade AB | InterContinental vs. Austevoll Seafood ASA | InterContinental vs. Hilton Food Group |
| Ross Stores vs. Odfjell Drilling | Ross Stores vs. Europa Metals | Ross Stores vs. AMG Advanced Metallurgical | Ross Stores vs. Adriatic Metals |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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