Correlation Between INTERCONT HOTELS and United Utilities
Can any of the company-specific risk be diversified away by investing in both INTERCONT HOTELS and United Utilities 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 United Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INTERCONT HOTELS and United Utilities Group, you can compare the effects of market volatilities on INTERCONT HOTELS and United Utilities 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 United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTERCONT HOTELS and United Utilities.
Diversification Opportunities for INTERCONT HOTELS and United Utilities
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between INTERCONT and United is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding INTERCONT HOTELS and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities 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 United Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Utilities has no effect on the direction of INTERCONT HOTELS i.e., INTERCONT HOTELS and United Utilities go up and down completely randomly.
Pair Corralation between INTERCONT HOTELS and United Utilities
Assuming the 90 days trading horizon INTERCONT HOTELS is expected to under-perform the United Utilities. But the stock apears to be less risky and, when comparing its historical volatility, INTERCONT HOTELS is 1.17 times less risky than United Utilities. The stock trades about -0.15 of its potential returns per unit of risk. The United Utilities Group is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 1,260 in United Utilities Group on December 30, 2024 and sell it today you would lose (90.00) from holding United Utilities Group or give up 7.14% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
INTERCONT HOTELS vs. United Utilities Group
Performance |
Timeline |
INTERCONT HOTELS |
United Utilities |
INTERCONT HOTELS and United Utilities Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with INTERCONT HOTELS and United Utilities
The main advantage of trading using opposite INTERCONT HOTELS and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTERCONT HOTELS position performs unexpectedly, United Utilities 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 United Utilities will offset losses from the drop in United Utilities' long position.INTERCONT HOTELS vs. Packaging of | INTERCONT HOTELS vs. ERSTE GP BNK | INTERCONT HOTELS vs. W R Berkley | INTERCONT HOTELS vs. News Corporation |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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