Correlation Between IMPERIAL TOBACCO and InterContinental
Can any of the company-specific risk be diversified away by investing in both IMPERIAL TOBACCO and InterContinental 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 IMPERIAL TOBACCO and InterContinental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMPERIAL TOBACCO and InterContinental Hotels Group, you can compare the effects of market volatilities on IMPERIAL TOBACCO and InterContinental 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 IMPERIAL TOBACCO with a short position of InterContinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMPERIAL TOBACCO and InterContinental.
Diversification Opportunities for IMPERIAL TOBACCO and InterContinental
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IMPERIAL and InterContinental is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding IMPERIAL TOBACCO and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO are associated (or correlated) with InterContinental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InterContinental Hotels has no effect on the direction of IMPERIAL TOBACCO i.e., IMPERIAL TOBACCO and InterContinental go up and down completely randomly.
Pair Corralation between IMPERIAL TOBACCO and InterContinental
Assuming the 90 days trading horizon IMPERIAL TOBACCO is expected to generate 1.5 times less return on investment than InterContinental. But when comparing it to its historical volatility, IMPERIAL TOBACCO is 1.61 times less risky than InterContinental. It trades about 0.19 of its potential returns per unit of risk. InterContinental Hotels Group is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 12,000 in InterContinental Hotels Group on October 29, 2024 and sell it today you would earn a total of 500.00 from holding InterContinental Hotels Group or generate 4.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
IMPERIAL TOBACCO vs. InterContinental Hotels Group
Performance |
| Timeline |
| IMPERIAL TOBACCO |
| InterContinental Hotels |
IMPERIAL TOBACCO and InterContinental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMPERIAL TOBACCO and InterContinental
The main advantage of trading using opposite IMPERIAL TOBACCO and InterContinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMPERIAL TOBACCO position performs unexpectedly, InterContinental 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 InterContinental will offset losses from the drop in InterContinental's long position.| IMPERIAL TOBACCO vs. Clean Energy Fuels | IMPERIAL TOBACCO vs. BII Railway Transportation | IMPERIAL TOBACCO vs. SALESFORCE INC CDR | IMPERIAL TOBACCO vs. Broadridge Financial Solutions |
| InterContinental vs. MPH Health Care | InterContinental vs. National Health Investors | InterContinental vs. Cardinal Health | InterContinental vs. CLOVER HEALTH INV |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |