Correlation Between Seven West and INTERCONT HOTELS
Can any of the company-specific risk be diversified away by investing in both Seven West and INTERCONT HOTELS 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 Seven West and INTERCONT HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seven West Media and INTERCONT HOTELS, you can compare the effects of market volatilities on Seven West and INTERCONT HOTELS 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 Seven West with a short position of INTERCONT HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seven West and INTERCONT HOTELS.
Diversification Opportunities for Seven West and INTERCONT HOTELS
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Seven and INTERCONT is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Seven West Media and INTERCONT HOTELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERCONT HOTELS and Seven West 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 Seven West Media are associated (or correlated) with INTERCONT HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERCONT HOTELS has no effect on the direction of Seven West i.e., Seven West and INTERCONT HOTELS go up and down completely randomly.
Pair Corralation between Seven West and INTERCONT HOTELS
Assuming the 90 days horizon Seven West Media is expected to generate 2.71 times more return on investment than INTERCONT HOTELS. However, Seven West is 2.71 times more volatile than INTERCONT HOTELS. It trades about 0.12 of its potential returns per unit of risk. INTERCONT HOTELS is currently generating about -0.18 per unit of risk. If you would invest 8.65 in Seven West Media on November 28, 2024 and sell it today you would earn a total of 0.95 from holding Seven West Media or generate 10.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Seven West Media vs. INTERCONT HOTELS
Performance |
| Timeline |
| Seven West Media |
| INTERCONT HOTELS |
Seven West and INTERCONT HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seven West and INTERCONT HOTELS
The main advantage of trading using opposite Seven West and INTERCONT HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seven West position performs unexpectedly, INTERCONT HOTELS 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 INTERCONT HOTELS will offset losses from the drop in INTERCONT HOTELS's long position.| Seven West vs. ScanSource | Seven West vs. Peijia Medical Limited | Seven West vs. CompuGroup Medical SE | Seven West vs. PULSION Medical Systems |
| INTERCONT HOTELS vs. Packaging of | INTERCONT HOTELS vs. ERSTE GP BNK | INTERCONT HOTELS vs. W R Berkley | INTERCONT HOTELS vs. News Corporation |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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