Correlation Between INTERCONT HOTELS and Levi Strauss

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

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

Diversification Opportunities for INTERCONT HOTELS and Levi Strauss

0.78

Correlation Coefficient

INTERCONT HOTELS  Levi Strauss

Poor diversification

The 3 months correlation between INTERCONT and Levi is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding INTERCONT HOTELS and Levi Strauss Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Levi Strauss 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 Levi Strauss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Levi Strauss has no effect on the direction of INTERCONT HOTELS i.e., INTERCONT HOTELS and Levi Strauss go up and down completely randomly.

Pair Corralation between INTERCONT HOTELS and Levi Strauss

Assuming the 90 days trading horizon INTERCONT HOTELS is expected to under-perform the Levi Strauss. But the stock apears to be less risky and, when comparing its historical volatility, INTERCONT HOTELS is 1.66 times less risky than Levi Strauss. The stock trades about -0.15 of its potential returns per unit of risk. The Levi Strauss Co is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,666  in Levi Strauss Co on December 21, 2024 and sell it today you would lose (181.00) from holding Levi Strauss Co or give up 10.86% of portfolio value over 90 days.

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

INTERCONT HOTELS  vs.  Levi Strauss Co

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.

Levi Strauss

Risk-Adjusted Performance

Very Weak

Over the last 90 days Levi Strauss Co 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 Levi Strauss

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

The idea behind INTERCONT HOTELS and Levi Strauss Co 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.