Correlation Between INTERCONT HOTELS and Fifth Third

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

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

Diversification Opportunities for INTERCONT HOTELS and Fifth Third

0.86

Correlation Coefficient

INTERCONT HOTELS  Fifth Third

Very poor diversification

The 3 months correlation between INTERCONT and Fifth is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding INTERCONT HOTELS and Fifth Third Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fifth Third Bancorp and INTERCONT HOTELS 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 INTERCONT HOTELS are associated (or correlated) with Fifth Third. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fifth Third Bancorp has no effect on the direction of INTERCONT HOTELS i.e., INTERCONT HOTELS and Fifth Third go up and down completely randomly.

Pair Corralation between INTERCONT HOTELS and Fifth Third

Assuming the 90 days trading horizon INTERCONT HOTELS is expected to under-perform the Fifth Third. In addition to that, INTERCONT HOTELS is 1.08 times more volatile than Fifth Third Bancorp. It trades about -0.15 of its total potential returns per unit of risk. Fifth Third Bancorp is currently generating about -0.07 per unit of volatility. If you would invest  4,041  in Fifth Third Bancorp on December 29, 2024 and sell it today you would lose (306.00) from holding Fifth Third Bancorp or give up 7.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

INTERCONT HOTELS  vs.  Fifth Third Bancorp

INTERCONT HOTELS

Risk-Adjusted Performance

Very Weak

Over the last 90 days INTERCONT HOTELS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak 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.

Fifth Third Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fifth Third Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with INTERCONT HOTELS and Fifth Third

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

The idea behind INTERCONT HOTELS and Fifth Third Bancorp 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.