Correlation Between W R and INTERCONT HOTELS

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

By analyzing existing cross correlation between W R Berkley and INTERCONT HOTELS, you can compare the effects of market volatilities on W R and INTERCONT HOTELS 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 W R with a short position of INTERCONT HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of W R and INTERCONT HOTELS.

Diversification Opportunities for W R and INTERCONT HOTELS

-0.24

Correlation Coefficient

W R  INTERCONT HOTELS

Very good diversification

The 3 months correlation between WR1 and INTERCONT is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding W R Berkley and INTERCONT HOTELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERCONT HOTELS and W R 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 W R Berkley are associated (or correlated) with INTERCONT HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERCONT HOTELS has no effect on the direction of W R i.e., W R and INTERCONT HOTELS go up and down completely randomly.

Pair Corralation between W R and INTERCONT HOTELS

Assuming the 90 days horizon W R Berkley is expected to generate 0.92 times more return on investment than INTERCONT HOTELS. However, W R Berkley is 1.09 times less risky than INTERCONT HOTELS. It trades about 0.09 of its potential returns per unit of risk. INTERCONT HOTELS is currently generating about -0.15 per unit of risk. If you would invest  5,597  in W R Berkley on December 29, 2024 and sell it today you would earn a total of  447.00  from holding W R Berkley or generate 7.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

W R Berkley  vs.  INTERCONT HOTELS

W R Berkley

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in W R Berkley are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, W R may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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.

Pair Trading with W R and INTERCONT HOTELS

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

The idea behind W R Berkley and INTERCONT HOTELS 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.