Correlation Between InterContinental and Reliance Industries
Can any of the company-specific risk be diversified away by investing in both InterContinental and Reliance Industries 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 Reliance Industries 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 Reliance Industries Ltd, you can compare the effects of market volatilities on InterContinental and Reliance Industries 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 Reliance Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and Reliance Industries.
Diversification Opportunities for InterContinental and Reliance Industries
-0.92 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between InterContinental and Reliance is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and Reliance Industries Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliance Industries 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 Reliance Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliance Industries has no effect on the direction of InterContinental i.e., InterContinental and Reliance Industries go up and down completely randomly.
Pair Corralation between InterContinental and Reliance Industries
Assuming the 90 days trading horizon InterContinental Hotels Group is expected to generate 1.4 times more return on investment than Reliance Industries. However, InterContinental is 1.4 times more volatile than Reliance Industries Ltd. It trades about 0.39 of its potential returns per unit of risk. Reliance Industries Ltd is currently generating about -0.44 per unit of risk. If you would invest 857,800 in InterContinental Hotels Group on August 24, 2024 and sell it today you would earn a total of 106,600 from holding InterContinental Hotels Group or generate 12.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
InterContinental Hotels Group vs. Reliance Industries Ltd
Performance |
| Timeline |
| InterContinental Hotels |
| Reliance Industries |
InterContinental and Reliance Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and Reliance Industries
The main advantage of trading using opposite InterContinental and Reliance Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, Reliance Industries 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 Reliance Industries will offset losses from the drop in Reliance Industries' long position.| InterContinental vs. Toyota Motor Corp | InterContinental vs. SoftBank Group Corp | InterContinental vs. State Bank of | InterContinental vs. Freddie Mac |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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