Correlation Between MGIC INVESTMENT and Xenia Hotels
Can any of the company-specific risk be diversified away by investing in both MGIC INVESTMENT 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 MGIC INVESTMENT and Xenia Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGIC INVESTMENT and Xenia Hotels Resorts, you can compare the effects of market volatilities on MGIC INVESTMENT 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 MGIC INVESTMENT with a short position of Xenia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC INVESTMENT and Xenia Hotels.
Diversification Opportunities for MGIC INVESTMENT and Xenia Hotels
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MGIC and Xenia is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding MGIC INVESTMENT 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 MGIC INVESTMENT 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 MGIC INVESTMENT 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 MGIC INVESTMENT i.e., MGIC INVESTMENT and Xenia Hotels go up and down completely randomly.
Pair Corralation between MGIC INVESTMENT and Xenia Hotels
Assuming the 90 days trading horizon MGIC INVESTMENT is expected to generate 11.06 times less return on investment than Xenia Hotels. But when comparing it to its historical volatility, MGIC INVESTMENT is 1.38 times less risky than Xenia Hotels. It trades about 0.02 of its potential returns per unit of risk. Xenia Hotels Resorts is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,350 in Xenia Hotels Resorts on September 13, 2024 and sell it today you would earn a total of 160.00 from holding Xenia Hotels Resorts or generate 11.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGIC INVESTMENT vs. Xenia Hotels Resorts
Performance |
| Timeline |
| MGIC INVESTMENT |
| Xenia Hotels Resorts |
MGIC INVESTMENT and Xenia Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC INVESTMENT and Xenia Hotels
The main advantage of trading using opposite MGIC INVESTMENT and Xenia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC INVESTMENT 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.| MGIC INVESTMENT vs. Apple Inc | MGIC INVESTMENT vs. Apple Inc | MGIC INVESTMENT vs. Apple Inc | MGIC INVESTMENT vs. Apple Inc |
| Xenia Hotels vs. Host Hotels Resorts | Xenia Hotels vs. Sunstone Hotel Investors | Xenia Hotels vs. Summit Hotel Properties | Xenia Hotels vs. ASHFORD HOSPITTRUST |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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