Correlation Between Flanigans Enterprises and InterContinental

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

By analyzing existing cross correlation between Flanigans Enterprises and InterContinental Hotels Group, you can compare the effects of market volatilities on Flanigans Enterprises and InterContinental 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 Flanigans Enterprises with a short position of InterContinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flanigans Enterprises and InterContinental.

Diversification Opportunities for Flanigans Enterprises and InterContinental

-0.28

Correlation Coefficient

Flanigans Enterprises  InterContinental

Very good diversification

The 3 months correlation between Flanigans and InterContinental is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Flanigans Enterprises and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels and Flanigans Enterprises 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 Flanigans Enterprises are associated (or correlated) with InterContinental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InterContinental Hotels has no effect on the direction of Flanigans Enterprises i.e., Flanigans Enterprises and InterContinental go up and down completely randomly.

Pair Corralation between Flanigans Enterprises and InterContinental

Considering the 90-day investment horizon Flanigans Enterprises is expected to generate 4.26 times less return on investment than InterContinental. In addition to that, Flanigans Enterprises is 1.41 times more volatile than InterContinental Hotels Group. It trades about 0.02 of its total potential returns per unit of risk. InterContinental Hotels Group is currently generating about 0.12 per unit of volatility. If you would invest  6,181  in InterContinental Hotels Group on January 31, 2024 and sell it today you would earn a total of  3,834  from holding InterContinental Hotels Group or generate 62.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.7%
Values	Daily Returns

Flanigans Enterprises  vs.  InterContinental Hotels Group

Flanigans Enterprises

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Flanigans Enterprises are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Flanigans Enterprises is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

InterContinental Hotels

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in InterContinental Hotels Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, InterContinental may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Flanigans Enterprises and InterContinental

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

The idea behind Flanigans Enterprises and InterContinental Hotels Group 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.

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.