Correlation Between InterContinental and Guaranty Trust

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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

InterContinentalGuarantyDiversified AwayInterContinentalGuarantyDiversified Away100%
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 Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

InterContinental Hotels Group  vs.  Guaranty Trust Holding

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -505101520
JavaScript chart by amCharts 3.21.15IHG GTCO
       Timeline  
InterContinental Hotels 

Risk-Adjusted Performance

20 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in InterContinental Hotels Group are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, InterContinental exhibited solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan8,5009,0009,50010,00010,500
Guaranty Trust Holding 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Guaranty Trust Holding are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Guaranty Trust may actually be approaching a critical reversion point that can send shares even higher in February 2025.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan1.751.81.851.91.952

InterContinental and Guaranty Trust Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.41-2.56-1.7-0.840.00.941.922.913.894.88 0.050.100.150.200.250.30
JavaScript chart by amCharts 3.21.15IHG GTCO
       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.
The idea behind InterContinental Hotels Group and Guaranty Trust Holding 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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