Correlation Between InterContinental and Texas Gulf
Can any of the company-specific risk be diversified away by investing in both InterContinental and Texas Gulf 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 Texas Gulf 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 Texas Gulf Energy, you can compare the effects of market volatilities on InterContinental and Texas Gulf 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 Texas Gulf. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and Texas Gulf.
Diversification Opportunities for InterContinental and Texas Gulf
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between InterContinental and Texas is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and Texas Gulf Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Gulf Energy 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 Texas Gulf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Gulf Energy has no effect on the direction of InterContinental i.e., InterContinental and Texas Gulf go up and down completely randomly.
Pair Corralation between InterContinental and Texas Gulf
Considering the 90-day investment horizon InterContinental Hotels Group is expected to under-perform the Texas Gulf. But the stock apears to be less risky and, when comparing its historical volatility, InterContinental Hotels Group is 1.56 times less risky than Texas Gulf. The stock trades about -0.06 of its potential returns per unit of risk. The Texas Gulf Energy is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 192,023 in Texas Gulf Energy on January 25, 2024 and sell it today you would earn a total of 21,392 from holding Texas Gulf Energy or generate 11.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
InterContinental Hotels Group vs. Texas Gulf Energy
Performance |
Timeline |
InterContinental Hotels |
Texas Gulf Energy |
InterContinental and Texas Gulf Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with InterContinental and Texas Gulf
The main advantage of trading using opposite InterContinental and Texas Gulf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, Texas Gulf 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 Texas Gulf will offset losses from the drop in Texas Gulf's long position.InterContinental vs. Hilton Worldwide Holdings | InterContinental vs. Marriott International | InterContinental vs. Choice Hotels International | InterContinental vs. Wyndham Hotels Resorts |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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