Correlation Between UNIVMUSIC GRPADR050 and InterContinental

Can any of the company-specific risk be diversified away by investing in both UNIVMUSIC GRPADR050 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 UNIVMUSIC GRPADR050 and InterContinental into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between UNIVMUSIC GRPADR050 and InterContinental Hotels Group, you can compare the effects of market volatilities on UNIVMUSIC GRPADR050 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 UNIVMUSIC GRPADR050 with a short position of InterContinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNIVMUSIC GRPADR050 and InterContinental.

Diversification Opportunities for UNIVMUSIC GRPADR050 and InterContinental

0.07

Correlation Coefficient

UNIVMUSIC GRPADR050  InterContinental

Significant diversification

The 3 months correlation between UNIVMUSIC and InterContinental is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding UNIVMUSIC GRPADR050 and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels and UNIVMUSIC GRPADR050 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 UNIVMUSIC GRPADR050 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 UNIVMUSIC GRPADR050 i.e., UNIVMUSIC GRPADR050 and InterContinental go up and down completely randomly.

Pair Corralation between UNIVMUSIC GRPADR050 and InterContinental

Assuming the 90 days trading horizon UNIVMUSIC GRPADR050 is expected to generate 1.19 times more return on investment than InterContinental. However, UNIVMUSIC GRPADR050 is 1.19 times more volatile than InterContinental Hotels Group. It trades about 0.04 of its potential returns per unit of risk. InterContinental Hotels Group is currently generating about -0.15 per unit of risk. If you would invest  1,210  in UNIVMUSIC GRPADR050 on December 26, 2024 and sell it today you would earn a total of  50.00  from holding UNIVMUSIC GRPADR050 or generate 4.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

UNIVMUSIC GRPADR050  vs.  InterContinental Hotels Group

UNIVMUSIC GRPADR050

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UNIVMUSIC GRPADR050 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, UNIVMUSIC GRPADR050 is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

InterContinental Hotels

Risk-Adjusted Performance

Very Weak

Over the last 90 days InterContinental Hotels Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with UNIVMUSIC GRPADR050 and InterContinental

The main advantage of trading using opposite UNIVMUSIC GRPADR050 and InterContinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNIVMUSIC GRPADR050 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 UNIVMUSIC GRPADR050 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.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.