Correlation Between InterContinental and Rheinmetall
Can any of the company-specific risk be diversified away by investing in both InterContinental and Rheinmetall 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 Rheinmetall 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 Rheinmetall AG, you can compare the effects of market volatilities on InterContinental and Rheinmetall 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 Rheinmetall. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and Rheinmetall.
Diversification Opportunities for InterContinental and Rheinmetall
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between InterContinental and Rheinmetall is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group and Rheinmetall AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rheinmetall AG 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 Rheinmetall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rheinmetall AG has no effect on the direction of InterContinental i.e., InterContinental and Rheinmetall go up and down completely randomly.
Pair Corralation between InterContinental and Rheinmetall
Assuming the 90 days trading horizon InterContinental is expected to generate 2.72 times less return on investment than Rheinmetall. But when comparing it to its historical volatility, InterContinental Hotels Group is 2.07 times less risky than Rheinmetall. It trades about 0.11 of its potential returns per unit of risk. Rheinmetall AG is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 138,274 in Rheinmetall AG on April 25, 2025 and sell it today you would earn a total of 39,076 from holding Rheinmetall AG or generate 28.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
InterContinental Hotels Group vs. Rheinmetall AG
Performance |
Timeline |
InterContinental Hotels |
Rheinmetall AG |
InterContinental and Rheinmetall Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with InterContinental and Rheinmetall
The main advantage of trading using opposite InterContinental and Rheinmetall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental position performs unexpectedly, Rheinmetall 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 Rheinmetall will offset losses from the drop in Rheinmetall's long position.InterContinental vs. SupplyMe Capital PLC | InterContinental vs. SANTANDER UK 10 | InterContinental vs. Coor Service Management | InterContinental vs. Fidelity Sustainable USD |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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