Correlation Between InterContinental and GB Group
Can any of the company-specific risk be diversified away by investing in both InterContinental and GB Group 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 GB Group 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 GB Group plc, you can compare the effects of market volatilities on InterContinental and GB Group 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 GB Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and GB Group.
Diversification Opportunities for InterContinental and GB Group
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between InterContinental and GBG is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and GB Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GB Group plc 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 GB Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GB Group plc has no effect on the direction of InterContinental i.e., InterContinental and GB Group go up and down completely randomly.
Pair Corralation between InterContinental and GB Group
Assuming the 90 days trading horizon InterContinental Hotels Group is expected to generate 0.52 times more return on investment than GB Group. However, InterContinental Hotels Group is 1.92 times less risky than GB Group. It trades about 0.12 of its potential returns per unit of risk. GB Group plc is currently generating about 0.03 per unit of risk. If you would invest 475,994 in InterContinental Hotels Group on September 3, 2024 and sell it today you would earn a total of 504,006 from holding InterContinental Hotels Group or generate 105.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
InterContinental Hotels Group vs. GB Group plc
Performance |
| Timeline |
| InterContinental Hotels |
| GB Group plc |
InterContinental and GB Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and GB Group
The main advantage of trading using opposite InterContinental and GB Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, GB Group 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 GB Group will offset losses from the drop in GB Group's long position.| InterContinental vs. Rockfire Resources plc | InterContinental vs. Tlou Energy | InterContinental vs. Falcon Oil Gas | InterContinental vs. Helium One Global |
| GB Group vs. Naked Wines plc | GB Group vs. Europa Metals | GB Group vs. Power Metal Resources | GB Group vs. InterContinental Hotels Group |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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