Correlation Between Whitbread PLC and Accor SA
Can any of the company-specific risk be diversified away by investing in both Whitbread PLC and Accor SA 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 Whitbread PLC and Accor SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Whitbread PLC ADR and Accor SA, you can compare the effects of market volatilities on Whitbread PLC and Accor SA 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 Whitbread PLC with a short position of Accor SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whitbread PLC and Accor SA.
Diversification Opportunities for Whitbread PLC and Accor SA
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Whitbread and Accor is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Whitbread PLC ADR and Accor SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accor SA and Whitbread PLC 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 Whitbread PLC ADR are associated (or correlated) with Accor SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accor SA has no effect on the direction of Whitbread PLC i.e., Whitbread PLC and Accor SA go up and down completely randomly.
Pair Corralation between Whitbread PLC and Accor SA
Assuming the 90 days horizon Whitbread PLC is expected to generate 3.23 times less return on investment than Accor SA. But when comparing it to its historical volatility, Whitbread PLC ADR is 1.07 times less risky than Accor SA. It trades about 0.03 of its potential returns per unit of risk. Accor SA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 515.00 in Accor SA on September 3, 2024 and sell it today you would earn a total of 395.00 from holding Accor SA or generate 76.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Whitbread PLC ADR vs. Accor SA
Performance |
| Timeline |
| Whitbread PLC ADR |
| Accor SA |
Whitbread PLC and Accor SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Whitbread PLC and Accor SA
The main advantage of trading using opposite Whitbread PLC and Accor SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whitbread PLC position performs unexpectedly, Accor SA 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 Accor SA will offset losses from the drop in Accor SA's long position.| Whitbread PLC vs. Hyatt Hotels | Whitbread PLC vs. Choice Hotels International | Whitbread PLC vs. Hilton Worldwide Holdings | Whitbread PLC vs. Wyndham Hotels Resorts |
| Accor SA vs. Huazhu Group | Accor SA vs. GreenTree Hospitality Group | Accor SA vs. Soho House Co | Accor SA vs. InterContinental Hotels 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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