Correlation Between InterContinental and Bankers Investment
Can any of the company-specific risk be diversified away by investing in both InterContinental and Bankers Investment 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 Bankers Investment 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 Bankers Investment Trust, you can compare the effects of market volatilities on InterContinental and Bankers Investment 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 Bankers Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and Bankers Investment.
Diversification Opportunities for InterContinental and Bankers Investment
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between InterContinental and Bankers is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and Bankers Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bankers Investment Trust 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 Bankers Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bankers Investment Trust has no effect on the direction of InterContinental i.e., InterContinental and Bankers Investment go up and down completely randomly.
Pair Corralation between InterContinental and Bankers Investment
Assuming the 90 days trading horizon InterContinental Hotels Group is expected to generate 1.5 times more return on investment than Bankers Investment. However, InterContinental is 1.5 times more volatile than Bankers Investment Trust. It trades about 0.11 of its potential returns per unit of risk. Bankers Investment Trust is currently generating about 0.04 per unit of risk. If you would invest 544,077 in InterContinental Hotels Group on October 12, 2024 and sell it today you would earn a total of 458,423 from holding InterContinental Hotels Group or generate 84.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
InterContinental Hotels Group vs. Bankers Investment Trust
Performance |
| Timeline |
| InterContinental Hotels |
| Bankers Investment Trust |
InterContinental and Bankers Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and Bankers Investment
The main advantage of trading using opposite InterContinental and Bankers Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, Bankers Investment 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 Bankers Investment will offset losses from the drop in Bankers Investment's long position.| InterContinental vs. Anglo Asian Mining | InterContinental vs. Beowulf Mining | InterContinental vs. United Utilities Group | InterContinental vs. Eastinco Mining Exploration |
| Bankers Investment vs. Eneraqua Technologies PLC | Bankers Investment vs. Spotify Technology SA | Bankers Investment vs. Blackrock World Mining | Bankers Investment vs. Technicolor |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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