Correlation Between Old Dominion and InterContinental
Can any of the company-specific risk be diversified away by investing in both Old Dominion 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 Old Dominion and InterContinental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Dominion Freight and InterContinental Hotels Group, you can compare the effects of market volatilities on Old Dominion 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 Old Dominion with a short position of InterContinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Dominion and InterContinental.
Diversification Opportunities for Old Dominion and InterContinental
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Old and InterContinental is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Old Dominion Freight and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels and Old Dominion 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 Old Dominion Freight 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 Old Dominion i.e., Old Dominion and InterContinental go up and down completely randomly.
Pair Corralation between Old Dominion and InterContinental
Assuming the 90 days horizon Old Dominion is expected to generate 1.58 times less return on investment than InterContinental. In addition to that, Old Dominion is 1.74 times more volatile than InterContinental Hotels Group. It trades about 0.05 of its total potential returns per unit of risk. InterContinental Hotels Group is currently generating about 0.13 per unit of volatility. If you would invest 7,866 in InterContinental Hotels Group on September 3, 2024 and sell it today you would earn a total of 3,934 from holding InterContinental Hotels Group or generate 50.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Dominion Freight vs. InterContinental Hotels Group
Performance |
| Timeline |
| Old Dominion Freight |
| InterContinental Hotels |
Old Dominion and InterContinental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Dominion and InterContinental
The main advantage of trading using opposite Old Dominion and InterContinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Dominion 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.| Old Dominion vs. HYATT HOTELS A | Old Dominion vs. Wyndham Hotels Resorts | Old Dominion vs. Zijin Mining Group | Old Dominion vs. Hyatt Hotels |
| InterContinental vs. Hilton Worldwide Holdings | InterContinental vs. Hyatt Hotels | InterContinental vs. INTERCONT HOTELS | InterContinental vs. ACCOR SPADR NEW |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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