Correlation Between Power Metal and InterContinental
Can any of the company-specific risk be diversified away by investing in both Power Metal 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 Power Metal and InterContinental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Metal Resources and InterContinental Hotels Group, you can compare the effects of market volatilities on Power Metal 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 Power Metal with a short position of InterContinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Metal and InterContinental.
Diversification Opportunities for Power Metal and InterContinental
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Power and InterContinental is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Power Metal Resources and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels and Power Metal 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 Power Metal Resources 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 Power Metal i.e., Power Metal and InterContinental go up and down completely randomly.
Pair Corralation between Power Metal and InterContinental
Assuming the 90 days trading horizon Power Metal Resources is expected to generate 4.49 times more return on investment than InterContinental. However, Power Metal is 4.49 times more volatile than InterContinental Hotels Group. It trades about 0.12 of its potential returns per unit of risk. InterContinental Hotels Group is currently generating about 0.28 per unit of risk. If you would invest 1,325 in Power Metal Resources on September 13, 2024 and sell it today you would earn a total of 138.00 from holding Power Metal Resources or generate 10.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power Metal Resources vs. InterContinental Hotels Group
Performance |
| Timeline |
| Power Metal Resources |
| InterContinental Hotels |
Power Metal and InterContinental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Metal and InterContinental
The main advantage of trading using opposite Power Metal and InterContinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Metal 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.| Power Metal vs. Naturhouse Health SA | Power Metal vs. MyHealthChecked Plc | Power Metal vs. Primary Health Properties | Power Metal vs. LBG Media PLC |
| InterContinental vs. Public Storage | InterContinental vs. Vienna Insurance Group | InterContinental vs. Alliance Data Systems | InterContinental vs. Evolution Gaming Group |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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