Correlation Between Media and InterContinental
Can any of the company-specific risk be diversified away by investing in both Media 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 Media and InterContinental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Media and Games and InterContinental Hotels Group, you can compare the effects of market volatilities on Media 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 Media with a short position of InterContinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Media and InterContinental.
Diversification Opportunities for Media and InterContinental
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Media and InterContinental is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Media and Games and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels and Media 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 Media and Games 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 Media i.e., Media and InterContinental go up and down completely randomly.
Pair Corralation between Media and InterContinental
Assuming the 90 days trading horizon Media is expected to generate 1.24 times less return on investment than InterContinental. In addition to that, Media is 2.05 times more volatile than InterContinental Hotels Group. It trades about 0.14 of its total potential returns per unit of risk. InterContinental Hotels Group is currently generating about 0.35 per unit of volatility. If you would invest 10,300 in InterContinental Hotels Group on August 30, 2024 and sell it today you would earn a total of 1,500 from holding InterContinental Hotels Group or generate 14.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Media and Games vs. InterContinental Hotels Group
Performance |
| Timeline |
| Media and Games |
| InterContinental Hotels |
Media and InterContinental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Media and InterContinental
The main advantage of trading using opposite Media and InterContinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Media 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.| Media vs. CVR Medical Corp | Media vs. Diamyd Medical AB | Media vs. Geratherm Medical AG | Media vs. SAFETY MEDICAL PROD |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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