Correlation Between Lords Grp and InterContinental
Can any of the company-specific risk be diversified away by investing in both Lords Grp 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 Lords Grp and InterContinental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lords Grp Trading and InterContinental Hotels Group, you can compare the effects of market volatilities on Lords Grp 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 Lords Grp with a short position of InterContinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lords Grp and InterContinental.
Diversification Opportunities for Lords Grp and InterContinental
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lords and InterContinental is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Lords Grp Trading and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels and Lords Grp 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 Lords Grp Trading 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 Lords Grp i.e., Lords Grp and InterContinental go up and down completely randomly.
Pair Corralation between Lords Grp and InterContinental
Assuming the 90 days trading horizon Lords Grp Trading is expected to under-perform the InterContinental. In addition to that, Lords Grp is 1.97 times more volatile than InterContinental Hotels Group. It trades about -0.08 of its total potential returns per unit of risk. InterContinental Hotels Group is currently generating about 0.15 per unit of volatility. If you would invest 789,595 in InterContinental Hotels Group on August 31, 2024 and sell it today you would earn a total of 190,405 from holding InterContinental Hotels Group or generate 24.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
Lords Grp Trading vs. InterContinental Hotels Group
Performance |
| Timeline |
| Lords Grp Trading |
| InterContinental Hotels |
Lords Grp and InterContinental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lords Grp and InterContinental
The main advantage of trading using opposite Lords Grp and InterContinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lords Grp 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.| Lords Grp vs. Naked Wines plc | Lords Grp vs. Lundin Mining Corp | Lords Grp vs. Taiwan Semiconductor Manufacturing | Lords Grp vs. GreenX Metals |
| InterContinental vs. STMicroelectronics NV | InterContinental vs. Vulcan Materials Co | InterContinental vs. Zoom Video Communications | InterContinental vs. LPKF Laser Electronics |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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