Correlation Between Magellan Financial and Hotel Property
Can any of the company-specific risk be diversified away by investing in both Magellan Financial and Hotel Property 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 Magellan Financial and Hotel Property into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magellan Financial Group and Hotel Property Investments, you can compare the effects of market volatilities on Magellan Financial and Hotel Property 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 Magellan Financial with a short position of Hotel Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magellan Financial and Hotel Property.
Diversification Opportunities for Magellan Financial and Hotel Property
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Magellan and Hotel is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Magellan Financial Group and Hotel Property Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotel Property Inves and Magellan Financial 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 Magellan Financial Group are associated (or correlated) with Hotel Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotel Property Inves has no effect on the direction of Magellan Financial i.e., Magellan Financial and Hotel Property go up and down completely randomly.
Pair Corralation between Magellan Financial and Hotel Property
Assuming the 90 days trading horizon Magellan Financial Group is expected to generate 8.99 times more return on investment than Hotel Property. However, Magellan Financial is 8.99 times more volatile than Hotel Property Investments. It trades about 0.15 of its potential returns per unit of risk. Hotel Property Investments is currently generating about 0.0 per unit of risk. If you would invest 1,105 in Magellan Financial Group on October 23, 2024 and sell it today you would earn a total of 46.00 from holding Magellan Financial Group or generate 4.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magellan Financial Group vs. Hotel Property Investments
Performance |
| Timeline |
| Magellan Financial |
| Hotel Property Inves |
Magellan Financial and Hotel Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magellan Financial and Hotel Property
The main advantage of trading using opposite Magellan Financial and Hotel Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magellan Financial position performs unexpectedly, Hotel Property 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 Hotel Property will offset losses from the drop in Hotel Property's long position.| Magellan Financial vs. Aneka Tambang Tbk | Magellan Financial vs. Commonwealth Bank of | Magellan Financial vs. Australia and New | Magellan Financial vs. ANZ Group Holdings |
| Hotel Property vs. Scentre Group | Hotel Property vs. Vicinity Centres Re | Hotel Property vs. Charter Hall Retail | Hotel Property vs. Cromwell Property Group |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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