Correlation Between D Wave and InterContinental
Can any of the company-specific risk be diversified away by investing in both D Wave 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 D Wave and InterContinental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between D Wave Quantum and InterContinental Hotels Group, you can compare the effects of market volatilities on D Wave 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 D Wave with a short position of InterContinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of D Wave and InterContinental.
Diversification Opportunities for D Wave and InterContinental
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between QBTS and InterContinental is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding D Wave Quantum and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels and D Wave 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 D Wave Quantum 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 D Wave i.e., D Wave and InterContinental go up and down completely randomly.
Pair Corralation between D Wave and InterContinental
Given the investment horizon of 90 days D Wave Quantum is expected to generate 10.87 times more return on investment than InterContinental. However, D Wave is 10.87 times more volatile than InterContinental Hotels Group. It trades about 0.03 of its potential returns per unit of risk. InterContinental Hotels Group is currently generating about -0.05 per unit of risk. If you would invest 637.00 in D Wave Quantum on October 20, 2024 and sell it today you would lose (110.00) from holding D Wave Quantum or give up 17.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
D Wave Quantum vs. InterContinental Hotels Group
Performance |
| Timeline |
| D Wave Quantum |
| InterContinental Hotels |
D Wave and InterContinental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with D Wave and InterContinental
The main advantage of trading using opposite D Wave and InterContinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if D Wave 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.The idea behind D Wave Quantum and InterContinental Hotels Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| InterContinental vs. Hyatt Hotels | InterContinental vs. Choice Hotels International | InterContinental vs. Hilton Worldwide Holdings | InterContinental vs. Wyndham Hotels Resorts |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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