Correlation Between TRAVEL + and InterContinental
Can any of the company-specific risk be diversified away by investing in both TRAVEL + 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 TRAVEL + and InterContinental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRAVEL LEISURE DL 01 and InterContinental Hotels Group, you can compare the effects of market volatilities on TRAVEL + 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 TRAVEL + with a short position of InterContinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAVEL + and InterContinental.
Diversification Opportunities for TRAVEL + and InterContinental
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TRAVEL and InterContinental is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding TRAVEL LEISURE DL 01 and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels and TRAVEL + 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 TRAVEL LEISURE DL 01 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 TRAVEL + i.e., TRAVEL + and InterContinental go up and down completely randomly.
Pair Corralation between TRAVEL + and InterContinental
Assuming the 90 days trading horizon TRAVEL + is expected to generate 1.19 times less return on investment than InterContinental. In addition to that, TRAVEL + is 1.13 times more volatile than InterContinental Hotels Group. It trades about 0.17 of its total potential returns per unit of risk. InterContinental Hotels Group is currently generating about 0.23 per unit of volatility. If you would invest 10,800 in InterContinental Hotels Group on November 6, 2024 and sell it today you would earn a total of 2,100 from holding InterContinental Hotels Group or generate 19.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TRAVEL LEISURE DL 01 vs. InterContinental Hotels Group
Performance |
| Timeline |
| TRAVEL LEISURE DL |
| InterContinental Hotels |
TRAVEL + and InterContinental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRAVEL + and InterContinental
The main advantage of trading using opposite TRAVEL + and InterContinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRAVEL + 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.| TRAVEL + vs. Nomad Foods | TRAVEL + vs. United Rentals | TRAVEL + vs. SENECA FOODS A | TRAVEL + vs. ALBIS LEASING AG |
| InterContinental vs. SBM OFFSHORE | InterContinental vs. Singapore Telecommunications Limited | InterContinental vs. TITAN MACHINERY | InterContinental vs. AGRICULTBK HADR25 YC |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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