Correlation Between InterContinental and DALATA HOTEL
Can any of the company-specific risk be diversified away by investing in both InterContinental and DALATA HOTEL 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 InterContinental and DALATA HOTEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InterContinental Hotels Group and DALATA HOTEL, you can compare the effects of market volatilities on InterContinental and DALATA HOTEL 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 InterContinental with a short position of DALATA HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and DALATA HOTEL.
Diversification Opportunities for InterContinental and DALATA HOTEL
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between InterContinental and DALATA is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and DALATA HOTEL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DALATA HOTEL and InterContinental 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 InterContinental Hotels Group are associated (or correlated) with DALATA HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DALATA HOTEL has no effect on the direction of InterContinental i.e., InterContinental and DALATA HOTEL go up and down completely randomly.
Pair Corralation between InterContinental and DALATA HOTEL
Assuming the 90 days trading horizon InterContinental Hotels Group is expected to generate 0.42 times more return on investment than DALATA HOTEL. However, InterContinental Hotels Group is 2.36 times less risky than DALATA HOTEL. It trades about 0.27 of its potential returns per unit of risk. DALATA HOTEL is currently generating about 0.08 per unit of risk. If you would invest 9,350 in InterContinental Hotels Group on September 14, 2024 and sell it today you would earn a total of 2,750 from holding InterContinental Hotels Group or generate 29.41% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
InterContinental Hotels Group vs. DALATA HOTEL
Performance |
Timeline |
InterContinental Hotels |
DALATA HOTEL |
InterContinental and DALATA HOTEL Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with InterContinental and DALATA HOTEL
The main advantage of trading using opposite InterContinental and DALATA HOTEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, DALATA HOTEL 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 DALATA HOTEL will offset losses from the drop in DALATA HOTEL's long position.InterContinental vs. Performance Food Group | InterContinental vs. TYSON FOODS A | InterContinental vs. Iridium Communications | InterContinental vs. National Beverage Corp |
DALATA HOTEL vs. CarsalesCom | DALATA HOTEL vs. Martin Marietta Materials | DALATA HOTEL vs. EAGLE MATERIALS | DALATA HOTEL vs. Goodyear Tire Rubber |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
Global Correlations Find global opportunities by holding instruments from different markets | |
Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |