Correlation Between MOUNT GIBSON and Xenia Hotels
Can any of the company-specific risk be diversified away by investing in both MOUNT GIBSON and Xenia Hotels 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 MOUNT GIBSON and Xenia Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MOUNT GIBSON IRON and Xenia Hotels Resorts, you can compare the effects of market volatilities on MOUNT GIBSON and Xenia Hotels 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 MOUNT GIBSON with a short position of Xenia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of MOUNT GIBSON and Xenia Hotels.
Diversification Opportunities for MOUNT GIBSON and Xenia Hotels
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between MOUNT and Xenia is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding MOUNT GIBSON IRON and Xenia Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xenia Hotels Resorts and MOUNT GIBSON 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 MOUNT GIBSON IRON are associated (or correlated) with Xenia Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xenia Hotels Resorts has no effect on the direction of MOUNT GIBSON i.e., MOUNT GIBSON and Xenia Hotels go up and down completely randomly.
Pair Corralation between MOUNT GIBSON and Xenia Hotels
Assuming the 90 days trading horizon MOUNT GIBSON IRON is expected to under-perform the Xenia Hotels. In addition to that, MOUNT GIBSON is 1.59 times more volatile than Xenia Hotels Resorts. It trades about -0.02 of its total potential returns per unit of risk. Xenia Hotels Resorts is currently generating about 0.05 per unit of volatility. If you would invest 1,277 in Xenia Hotels Resorts on October 25, 2024 and sell it today you would earn a total of 133.00 from holding Xenia Hotels Resorts or generate 10.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MOUNT GIBSON IRON vs. Xenia Hotels Resorts
Performance |
| Timeline |
| MOUNT GIBSON IRON |
| Xenia Hotels Resorts |
MOUNT GIBSON and Xenia Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MOUNT GIBSON and Xenia Hotels
The main advantage of trading using opposite MOUNT GIBSON and Xenia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MOUNT GIBSON position performs unexpectedly, Xenia Hotels 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 Xenia Hotels will offset losses from the drop in Xenia Hotels' long position.| MOUNT GIBSON vs. Xenia Hotels Resorts | MOUNT GIBSON vs. UNITED UTILITIES GR | MOUNT GIBSON vs. American Public Education | MOUNT GIBSON vs. Laureate Education |
| Xenia Hotels vs. Host Hotels Resorts | Xenia Hotels vs. Sunstone Hotel Investors | Xenia Hotels vs. Summit Hotel Properties |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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