Correlation Between InterContinental and Hilton Worldwide
Can any of the company-specific risk be diversified away by investing in both InterContinental and Hilton Worldwide 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 Hilton Worldwide 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 Hilton Worldwide Holdings, you can compare the effects of market volatilities on InterContinental and Hilton Worldwide 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 Hilton Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and Hilton Worldwide.
Diversification Opportunities for InterContinental and Hilton Worldwide
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between InterContinental and Hilton is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and Hilton Worldwide Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilton Worldwide Holdings 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 Hilton Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilton Worldwide Holdings has no effect on the direction of InterContinental i.e., InterContinental and Hilton Worldwide go up and down completely randomly.
Pair Corralation between InterContinental and Hilton Worldwide
Considering the 90-day investment horizon InterContinental Hotels Group is expected to generate 1.04 times more return on investment than Hilton Worldwide. However, InterContinental is 1.04 times more volatile than Hilton Worldwide Holdings. It trades about 0.34 of its potential returns per unit of risk. Hilton Worldwide Holdings is currently generating about 0.26 per unit of risk. If you would invest 11,308 in InterContinental Hotels Group on August 27, 2024 and sell it today you would earn a total of 1,033 from holding InterContinental Hotels Group or generate 9.14% 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. Hilton Worldwide Holdings
Performance |
| Timeline |
| InterContinental Hotels |
| Hilton Worldwide Holdings |
InterContinental and Hilton Worldwide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and Hilton Worldwide
The main advantage of trading using opposite InterContinental and Hilton Worldwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, Hilton Worldwide 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 Hilton Worldwide will offset losses from the drop in Hilton Worldwide's long position.| InterContinental vs. Hilton Worldwide Holdings | InterContinental vs. Marriott International | InterContinental vs. Choice Hotels International | InterContinental vs. Wyndham Hotels Resorts |
| Hilton Worldwide vs. Hyatt Hotels | Hilton Worldwide vs. Wyndham Hotels Resorts | Hilton Worldwide vs. Choice Hotels International | Hilton Worldwide 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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