Correlation Between Grupo Hotelero and Magna International
Can any of the company-specific risk be diversified away by investing in both Grupo Hotelero and Magna International 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 Grupo Hotelero and Magna International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Hotelero Santa and Magna International, you can compare the effects of market volatilities on Grupo Hotelero and Magna International 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 Grupo Hotelero with a short position of Magna International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Hotelero and Magna International.
Diversification Opportunities for Grupo Hotelero and Magna International
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Grupo and Magna is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Hotelero Santa and Magna International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna International and Grupo Hotelero 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 Grupo Hotelero Santa are associated (or correlated) with Magna International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magna International has no effect on the direction of Grupo Hotelero i.e., Grupo Hotelero and Magna International go up and down completely randomly.
Pair Corralation between Grupo Hotelero and Magna International
Assuming the 90 days trading horizon Grupo Hotelero Santa is expected to generate 2.29 times more return on investment than Magna International. However, Grupo Hotelero is 2.29 times more volatile than Magna International. It trades about 0.07 of its potential returns per unit of risk. Magna International is currently generating about 0.04 per unit of risk. If you would invest 364.00 in Grupo Hotelero Santa on September 3, 2024 and sell it today you would earn a total of 36.00 from holding Grupo Hotelero Santa or generate 9.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.39% |
| Values | Daily Returns |
Grupo Hotelero Santa vs. Magna International
Performance |
| Timeline |
| Grupo Hotelero Santa |
| Magna International |
Grupo Hotelero and Magna International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Hotelero and Magna International
The main advantage of trading using opposite Grupo Hotelero and Magna International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Hotelero position performs unexpectedly, Magna International 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 International will offset losses from the drop in Magna International's long position.| Grupo Hotelero vs. Axtel SAB de | Grupo Hotelero vs. Fomento Econmico Mexicano | Grupo Hotelero vs. Lloyds Banking Group | Grupo Hotelero vs. Apple Inc |
| Magna International vs. Grupo Hotelero Santa | Magna International vs. GMxico Transportes SAB | Magna International vs. Micron Technology | Magna International vs. Southern Copper |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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