Correlation Between American Hotel and Magna Mining
Can any of the company-specific risk be diversified away by investing in both American Hotel and Magna Mining 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 American Hotel and Magna Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Hotel Income and Magna Mining, you can compare the effects of market volatilities on American Hotel and Magna Mining 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 American Hotel with a short position of Magna Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Hotel and Magna Mining.
Diversification Opportunities for American Hotel and Magna Mining
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between American and Magna is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding American Hotel Income and Magna Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna Mining and American Hotel 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 American Hotel Income are associated (or correlated) with Magna Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magna Mining has no effect on the direction of American Hotel i.e., American Hotel and Magna Mining go up and down completely randomly.
Pair Corralation between American Hotel and Magna Mining
Assuming the 90 days trading horizon American Hotel Income is expected to under-perform the Magna Mining. In addition to that, American Hotel is 1.22 times more volatile than Magna Mining. It trades about -0.02 of its total potential returns per unit of risk. Magna Mining is currently generating about 0.04 per unit of volatility. If you would invest 112.00 in Magna Mining on October 23, 2024 and sell it today you would earn a total of 41.00 from holding Magna Mining or generate 36.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 92.91% |
| Values | Daily Returns |
American Hotel Income vs. Magna Mining
Performance |
| Timeline |
| American Hotel Income |
| Magna Mining |
American Hotel and Magna Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Hotel and Magna Mining
The main advantage of trading using opposite American Hotel and Magna Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Hotel position performs unexpectedly, Magna Mining 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 Magna Mining will offset losses from the drop in Magna Mining's long position.| American Hotel vs. Orca Energy Group | American Hotel vs. Rogers Communications | American Hotel vs. Aclara Resources | American Hotel vs. Buhler Industries |
| Magna Mining vs. Brunswick Exploration | Magna Mining vs. Fireweed Zinc | Magna Mining vs. Emerita Resources Corp | Magna Mining vs. InZinc Mining |
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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