Correlation Between Brown Brown and INTERCONT HOTELS

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

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

Diversification Opportunities for Brown Brown and INTERCONT HOTELS

0.73

Correlation Coefficient

Brown Brown  INTERCONT HOTELS

Poor diversification

The 3 months correlation between Brown and INTERCONT is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Brown Brown and INTERCONT HOTELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERCONT HOTELS and Brown Brown 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 Brown Brown are associated (or correlated) with INTERCONT HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERCONT HOTELS has no effect on the direction of Brown Brown i.e., Brown Brown and INTERCONT HOTELS go up and down completely randomly.

Pair Corralation between Brown Brown and INTERCONT HOTELS

Assuming the 90 days horizon Brown Brown is expected to generate 1.3 times less return on investment than INTERCONT HOTELS. But when comparing it to its historical volatility, Brown Brown is 1.34 times less risky than INTERCONT HOTELS. It trades about 0.11 of its potential returns per unit of risk. INTERCONT HOTELS is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  7,420  in INTERCONT HOTELS on October 3, 2024 and sell it today you would earn a total of  4,480  from holding INTERCONT HOTELS or generate 60.38% return on investment over 90 days.

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

Brown Brown  vs.  INTERCONT HOTELS

Brown Brown

Risk-Adjusted Performance

3 of 100

Insignificant

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

INTERCONT HOTELS

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in INTERCONT HOTELS are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, INTERCONT HOTELS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brown Brown and INTERCONT HOTELS

The main advantage of trading using opposite Brown Brown and INTERCONT HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brown Brown position performs unexpectedly, INTERCONT HOTELS 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 INTERCONT HOTELS will offset losses from the drop in INTERCONT HOTELS's long position.

The idea behind Brown Brown and INTERCONT HOTELS 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 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..