Correlation Between Mitsubishi Materials and InterContinental
Can any of the company-specific risk be diversified away by investing in both Mitsubishi Materials 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 Mitsubishi Materials and InterContinental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsubishi Materials and InterContinental Hotels Group, you can compare the effects of market volatilities on Mitsubishi Materials 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 Mitsubishi Materials with a short position of InterContinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi Materials and InterContinental.
Diversification Opportunities for Mitsubishi Materials and InterContinental
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mitsubishi and InterContinental is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi Materials and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels and Mitsubishi Materials 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 Mitsubishi Materials 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 Mitsubishi Materials i.e., Mitsubishi Materials and InterContinental go up and down completely randomly.
Pair Corralation between Mitsubishi Materials and InterContinental
Assuming the 90 days trading horizon Mitsubishi Materials is expected to under-perform the InterContinental. But the stock apears to be less risky and, when comparing its historical volatility, Mitsubishi Materials is 1.09 times less risky than InterContinental. The stock trades about -0.01 of its potential returns per unit of risk. The InterContinental Hotels Group is currently generating about 0.48 of returns per unit of risk over similar time horizon. If you would invest 10,100 in InterContinental Hotels Group on September 4, 2024 and sell it today you would earn a total of 2,000 from holding InterContinental Hotels Group or generate 19.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitsubishi Materials vs. InterContinental Hotels Group
Performance |
| Timeline |
| Mitsubishi Materials |
| InterContinental Hotels |
Mitsubishi Materials and InterContinental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsubishi Materials and InterContinental
The main advantage of trading using opposite Mitsubishi Materials and InterContinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsubishi Materials 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.| Mitsubishi Materials vs. TOTAL GABON | Mitsubishi Materials vs. Walgreens Boots Alliance | Mitsubishi Materials vs. Peak Resources Limited |
| InterContinental vs. Materialise NV | InterContinental vs. Mitsubishi Materials | InterContinental vs. VARIOUS EATERIES LS | InterContinental vs. Harmony Gold Mining |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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