Correlation Between Morgan Advanced and Host Hotels
Can any of the company-specific risk be diversified away by investing in both Morgan Advanced and Host 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 Morgan Advanced and Host Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Advanced Materials and Host Hotels Resorts, you can compare the effects of market volatilities on Morgan Advanced and Host 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 Morgan Advanced with a short position of Host Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Advanced and Host Hotels.
Diversification Opportunities for Morgan Advanced and Host Hotels
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Morgan and Host is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Advanced Materials and Host Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Host Hotels Resorts and Morgan Advanced 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 Morgan Advanced Materials are associated (or correlated) with Host Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Host Hotels Resorts has no effect on the direction of Morgan Advanced i.e., Morgan Advanced and Host Hotels go up and down completely randomly.
Pair Corralation between Morgan Advanced and Host Hotels
Assuming the 90 days trading horizon Morgan Advanced Materials is expected to generate 0.43 times more return on investment than Host Hotels. However, Morgan Advanced Materials is 2.31 times less risky than Host Hotels. It trades about 0.0 of its potential returns per unit of risk. Host Hotels Resorts is currently generating about -0.3 per unit of risk. If you would invest 26,900 in Morgan Advanced Materials on October 12, 2024 and sell it today you would earn a total of 0.00 from holding Morgan Advanced Materials or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Morgan Advanced Materials vs. Host Hotels Resorts
Performance |
| Timeline |
| Morgan Advanced Materials |
| Host Hotels Resorts |
Morgan Advanced and Host Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Advanced and Host Hotels
The main advantage of trading using opposite Morgan Advanced and Host Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Advanced position performs unexpectedly, Host 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 Host Hotels will offset losses from the drop in Host Hotels' long position.| Morgan Advanced vs. Tatton Asset Management | Morgan Advanced vs. LBG Media PLC | Morgan Advanced vs. Atalaya Mining | Morgan Advanced vs. Atresmedia |
| Host Hotels vs. Morgan Advanced Materials | Host Hotels vs. JB Hunt Transport | Host Hotels vs. Europa Metals | Host Hotels vs. Capital Metals PLC |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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