Correlation Between InterContinental and HP
Can any of the company-specific risk be diversified away by investing in both InterContinental and HP 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 HP 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 HP Inc, you can compare the effects of market volatilities on InterContinental and HP 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 HP. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and HP.
Diversification Opportunities for InterContinental and HP
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between InterContinental and HP is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and HP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HP Inc 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 HP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HP Inc has no effect on the direction of InterContinental i.e., InterContinental and HP go up and down completely randomly.
Pair Corralation between InterContinental and HP
Considering the 90-day investment horizon InterContinental Hotels Group is expected to generate 0.77 times more return on investment than HP. However, InterContinental Hotels Group is 1.29 times less risky than HP. It trades about -0.16 of its potential returns per unit of risk. HP Inc is currently generating about -0.21 per unit of risk. If you would invest 10,559 in InterContinental Hotels Group on January 26, 2024 and sell it today you would lose (397.00) from holding InterContinental Hotels Group or give up 3.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
InterContinental Hotels Group vs. HP Inc
Performance |
| Timeline |
| InterContinental Hotels |
| HP Inc |
InterContinental and HP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and HP
The main advantage of trading using opposite InterContinental and HP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, HP 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 HP will offset losses from the drop in HP'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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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