Correlation Between InterContinental and Visa
Can any of the company-specific risk be diversified away by investing in both InterContinental and Visa 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 Visa 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 Visa Class A, you can compare the effects of market volatilities on InterContinental and Visa 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 Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and Visa.
Diversification Opportunities for InterContinental and Visa
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between InterContinental and Visa is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and Visa Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Class A 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 Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Class A has no effect on the direction of InterContinental i.e., InterContinental and Visa go up and down completely randomly.
Pair Corralation between InterContinental and Visa
Considering the 90-day investment horizon InterContinental Hotels Group is expected to under-perform the Visa. In addition to that, InterContinental is 1.18 times more volatile than Visa Class A. It trades about -0.16 of its total potential returns per unit of risk. Visa Class A is currently generating about -0.07 per unit of volatility. If you would invest 28,317 in Visa Class A on December 29, 2023 and sell it today you would lose (415.00) from holding Visa Class A or give up 1.47% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
InterContinental Hotels Group vs. Visa Class A
Performance |
Timeline |
InterContinental Hotels |
Visa Class A |
InterContinental and Visa Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with InterContinental and Visa
The main advantage of trading using opposite InterContinental and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, Visa 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 Visa will offset losses from the drop in Visa's long position.InterContinental vs. Monarch Casino Resort | InterContinental vs. Biglari Holdings | InterContinental vs. Smart Share Global | InterContinental vs. Sweetgreen |
Visa vs. Diamond Hill Investment | Visa vs. Nocturne Acquisition Corp | Visa vs. Mountain I Acquisition | Visa vs. Mountain Crest Acquisition |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |