Correlation Between Intermediate Capital and Travel Leisure

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

By analyzing existing cross correlation between Intermediate Capital Group and Travel Leisure Co, you can compare the effects of market volatilities on Intermediate Capital and Travel Leisure 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 Intermediate Capital with a short position of Travel Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intermediate Capital and Travel Leisure.

Diversification Opportunities for Intermediate Capital and Travel Leisure

0.04

Correlation Coefficient

Intermediate Capital  Travel Leisure

Significant diversification

The 3 months correlation between Intermediate and Travel is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Capital Group and Travel Leisure Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Travel Leisure and Intermediate Capital 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 Intermediate Capital Group are associated (or correlated) with Travel Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Travel Leisure has no effect on the direction of Intermediate Capital i.e., Intermediate Capital and Travel Leisure go up and down completely randomly.

Pair Corralation between Intermediate Capital and Travel Leisure

Assuming the 90 days trading horizon Intermediate Capital Group is expected to generate 0.74 times more return on investment than Travel Leisure. However, Intermediate Capital Group is 1.35 times less risky than Travel Leisure. It trades about 0.04 of its potential returns per unit of risk. Travel Leisure Co is currently generating about 0.02 per unit of risk. If you would invest  204,723  in Intermediate Capital Group on October 10, 2024 and sell it today you would earn a total of  6,077  from holding Intermediate Capital Group or generate 2.97% return on investment over 90 days.

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

Intermediate Capital Group  vs.  Travel Leisure Co

Intermediate Capital

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intermediate Capital Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Intermediate Capital is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Travel Leisure

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Travel Leisure Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Travel Leisure is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Intermediate Capital and Travel Leisure

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

The idea behind Intermediate Capital Group and Travel Leisure 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.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.