Correlation Between Medibank Private and Hotel Property
Can any of the company-specific risk be diversified away by investing in both Medibank Private 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 Medibank Private and Hotel Property into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medibank Private and Hotel Property Investments, you can compare the effects of market volatilities on Medibank Private 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 Medibank Private with a short position of Hotel Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medibank Private and Hotel Property.
Diversification Opportunities for Medibank Private and Hotel Property
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Medibank and Hotel is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Medibank Private 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 Medibank Private 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 Medibank Private 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 Medibank Private i.e., Medibank Private and Hotel Property go up and down completely randomly.
Pair Corralation between Medibank Private and Hotel Property
Assuming the 90 days trading horizon Medibank Private is expected to generate 0.8 times more return on investment than Hotel Property. However, Medibank Private is 1.26 times less risky than Hotel Property. It trades about 0.06 of its potential returns per unit of risk. Hotel Property Investments is currently generating about 0.03 per unit of risk. If you would invest 270.00 in Medibank Private on September 26, 2024 and sell it today you would earn a total of 111.00 from holding Medibank Private or generate 41.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Medibank Private vs. Hotel Property Investments
Performance |
| Timeline |
| Medibank Private |
| Hotel Property Inves |
Medibank Private and Hotel Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medibank Private and Hotel Property
The main advantage of trading using opposite Medibank Private and Hotel Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medibank Private 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.| Medibank Private vs. Accent Resources NL | Medibank Private vs. Hutchison Telecommunications | Medibank Private vs. Energy Resources | Medibank Private vs. GO2 People |
| Hotel Property vs. Medibank Private | Hotel Property vs. G8 Education | Hotel Property vs. Bell Financial Group | Hotel Property vs. MotorCycle Holdings |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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