Correlation Between InterContinental and Guaranty Trust
Can any of the company-specific risk be diversified away by investing in both InterContinental and Guaranty Trust 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 InterContinental and Guaranty Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InterContinental Hotels Group and Guaranty Trust Holding, you can compare the effects of market volatilities on InterContinental and Guaranty Trust 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 InterContinental with a short position of Guaranty Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and Guaranty Trust.
Diversification Opportunities for InterContinental and Guaranty Trust
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between InterContinental and Guaranty is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and Guaranty Trust Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guaranty Trust Holding and InterContinental 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 InterContinental Hotels Group are associated (or correlated) with Guaranty Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guaranty Trust Holding has no effect on the direction of InterContinental i.e., InterContinental and Guaranty Trust go up and down completely randomly.
Pair Corralation between InterContinental and Guaranty Trust
Assuming the 90 days trading horizon InterContinental Hotels Group is expected to generate 0.62 times more return on investment than Guaranty Trust. However, InterContinental Hotels Group is 1.61 times less risky than Guaranty Trust. It trades about 0.27 of its potential returns per unit of risk. Guaranty Trust Holding is currently generating about 0.07 per unit of risk. If you would invest 856,600 in InterContinental Hotels Group on October 20, 2024 and sell it today you would earn a total of 179,900 from holding InterContinental Hotels Group or generate 21.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
InterContinental Hotels Group vs. Guaranty Trust Holding
Performance |
Timeline |
InterContinental Hotels |
Guaranty Trust Holding |
InterContinental and Guaranty Trust Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with InterContinental and Guaranty Trust
The main advantage of trading using opposite InterContinental and Guaranty Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, Guaranty Trust 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 Guaranty Trust will offset losses from the drop in Guaranty Trust's long position.InterContinental vs. bet at home AG | ||
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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