Correlation Between InterContinental and Boeing
Can any of the company-specific risk be diversified away by investing in both InterContinental and Boeing 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 Boeing 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 The Boeing, you can compare the effects of market volatilities on InterContinental and Boeing 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 Boeing. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and Boeing.
Diversification Opportunities for InterContinental and Boeing
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between InterContinental and Boeing is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and The Boeing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing 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 Boeing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boeing has no effect on the direction of InterContinental i.e., InterContinental and Boeing go up and down completely randomly.
Pair Corralation between InterContinental and Boeing
Considering the 90-day investment horizon InterContinental Hotels Group is expected to generate 0.74 times more return on investment than Boeing. However, InterContinental Hotels Group is 1.36 times less risky than Boeing. It trades about 0.1 of its potential returns per unit of risk. The Boeing is currently generating about -0.02 per unit of risk. If you would invest 6,648 in InterContinental Hotels Group on January 21, 2024 and sell it today you would earn a total of 3,091 from holding InterContinental Hotels Group or generate 46.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.66% |
| Values | Daily Returns |
InterContinental Hotels Group vs. The Boeing
Performance |
| Timeline |
| InterContinental Hotels |
| Boeing |
InterContinental and Boeing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and Boeing
The main advantage of trading using opposite InterContinental and Boeing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, Boeing 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 Boeing will offset losses from the drop in Boeing's long position.| InterContinental vs. Yatra Online | InterContinental vs. Despegar Corp | InterContinental vs. Mondee Holdings | InterContinental vs. MakeMyTrip Limited |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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