Correlation Between InterContinental and Trainline Plc
Can any of the company-specific risk be diversified away by investing in both InterContinental and Trainline Plc 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 Trainline Plc 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 Trainline Plc, you can compare the effects of market volatilities on InterContinental and Trainline Plc 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 Trainline Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and Trainline Plc.
Diversification Opportunities for InterContinental and Trainline Plc
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between InterContinental and Trainline is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and Trainline Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trainline 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 Trainline Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trainline Plc has no effect on the direction of InterContinental i.e., InterContinental and Trainline Plc go up and down completely randomly.
Pair Corralation between InterContinental and Trainline Plc
Assuming the 90 days trading horizon InterContinental Hotels Group is expected to generate 0.58 times more return on investment than Trainline Plc. However, InterContinental Hotels Group is 1.72 times less risky than Trainline Plc. It trades about 0.46 of its potential returns per unit of risk. Trainline Plc is currently generating about 0.18 per unit of risk. If you would invest 857,600 in InterContinental Hotels Group on August 31, 2024 and sell it today you would earn a total of 121,600 from holding InterContinental Hotels Group or generate 14.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
InterContinental Hotels Group vs. Trainline Plc
Performance |
| Timeline |
| InterContinental Hotels |
| Trainline Plc |
InterContinental and Trainline Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and Trainline Plc
The main advantage of trading using opposite InterContinental and Trainline Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, Trainline Plc 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 Trainline Plc will offset losses from the drop in Trainline Plc's long position.| InterContinental vs. STMicroelectronics NV | InterContinental vs. Vulcan Materials Co | InterContinental vs. Zoom Video Communications | InterContinental vs. LPKF Laser Electronics |
| Trainline Plc vs. Eastinco Mining Exploration | Trainline Plc vs. Anglesey Mining | Trainline Plc vs. Silvercorp Metals | Trainline Plc vs. Thor Mining PLC |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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