Correlation Between ACCOR SPADR and InterContinental

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

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

Diversification Opportunities for ACCOR SPADR and InterContinental

0.62

Correlation Coefficient

ACCOR SPADR  InterContinental

Poor diversification

The 3 months correlation between ACCOR and InterContinental is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding ACCOR SPADR NEW and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels and ACCOR SPADR 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 ACCOR SPADR NEW 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 ACCOR SPADR i.e., ACCOR SPADR and InterContinental go up and down completely randomly.

Pair Corralation between ACCOR SPADR and InterContinental

Assuming the 90 days trading horizon ACCOR SPADR NEW is expected to generate 0.84 times more return on investment than InterContinental. However, ACCOR SPADR NEW is 1.19 times less risky than InterContinental. It trades about 0.14 of its potential returns per unit of risk. InterContinental Hotels Group is currently generating about 0.03 per unit of risk. If you would invest  855.00  in ACCOR SPADR NEW on December 2, 2024 and sell it today you would earn a total of  95.00  from holding ACCOR SPADR NEW or generate 11.11% return on investment over 90 days.

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

ACCOR SPADR NEW  vs.  InterContinental Hotels Group

ACCOR SPADR NEW

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ACCOR SPADR NEW are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ACCOR SPADR may actually be approaching a critical reversion point that can send shares even higher in April 2025.

InterContinental Hotels

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in InterContinental Hotels Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, InterContinental is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ACCOR SPADR and InterContinental

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

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.