Correlation Between Xenia Hotels and MGIC INVESTMENT
Can any of the company-specific risk be diversified away by investing in both Xenia Hotels and MGIC INVESTMENT 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 Xenia Hotels and MGIC INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xenia Hotels Resorts and MGIC INVESTMENT, you can compare the effects of market volatilities on Xenia Hotels and MGIC INVESTMENT 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 Xenia Hotels with a short position of MGIC INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xenia Hotels and MGIC INVESTMENT.
Diversification Opportunities for Xenia Hotels and MGIC INVESTMENT
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xenia and MGIC is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Xenia Hotels Resorts and MGIC INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC INVESTMENT and Xenia Hotels 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 Xenia Hotels Resorts are associated (or correlated) with MGIC INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGIC INVESTMENT has no effect on the direction of Xenia Hotels i.e., Xenia Hotels and MGIC INVESTMENT go up and down completely randomly.
Pair Corralation between Xenia Hotels and MGIC INVESTMENT
Assuming the 90 days trading horizon Xenia Hotels Resorts is expected to generate 1.72 times more return on investment than MGIC INVESTMENT. However, Xenia Hotels is 1.72 times more volatile than MGIC INVESTMENT. It trades about 0.13 of its potential returns per unit of risk. MGIC INVESTMENT is currently generating about 0.01 per unit of risk. If you would invest 1,430 in Xenia Hotels Resorts on September 13, 2024 and sell it today you would earn a total of 80.00 from holding Xenia Hotels Resorts or generate 5.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xenia Hotels Resorts vs. MGIC INVESTMENT
Performance |
| Timeline |
| Xenia Hotels Resorts |
| MGIC INVESTMENT |
Xenia Hotels and MGIC INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xenia Hotels and MGIC INVESTMENT
The main advantage of trading using opposite Xenia Hotels and MGIC INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xenia Hotels position performs unexpectedly, MGIC INVESTMENT 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 MGIC INVESTMENT will offset losses from the drop in MGIC INVESTMENT's long position.| Xenia Hotels vs. Host Hotels Resorts | Xenia Hotels vs. Sunstone Hotel Investors | Xenia Hotels vs. Summit Hotel Properties | Xenia Hotels vs. ASHFORD HOSPITTRUST |
| MGIC INVESTMENT vs. Apple Inc | MGIC INVESTMENT vs. Apple Inc | MGIC INVESTMENT vs. Apple Inc | MGIC INVESTMENT vs. Apple Inc |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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