Correlation Between Playa Hotels and MGIC Investment
Can any of the company-specific risk be diversified away by investing in both Playa Hotels and MGIC Investment 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 Playa Hotels and MGIC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Playa Hotels Resorts and MGIC Investment, you can compare the effects of market volatilities on Playa Hotels and MGIC Investment 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 Playa Hotels with a short position of MGIC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playa Hotels and MGIC Investment.
Diversification Opportunities for Playa Hotels and MGIC Investment
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Playa and MGIC is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Playa Hotels Resorts and MGIC Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC Investment and Playa Hotels 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 Playa Hotels Resorts are associated (or correlated) with MGIC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGIC Investment has no effect on the direction of Playa Hotels i.e., Playa Hotels and MGIC Investment go up and down completely randomly.
Pair Corralation between Playa Hotels and MGIC Investment
Assuming the 90 days horizon Playa Hotels Resorts is expected to under-perform the MGIC Investment. But the stock apears to be less risky and, when comparing its historical volatility, Playa Hotels Resorts is 1.45 times less risky than MGIC Investment. The stock trades about -0.05 of its potential returns per unit of risk. The MGIC Investment is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,280 in MGIC Investment on November 3, 2024 and sell it today you would earn a total of 140.00 from holding MGIC Investment or generate 6.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playa Hotels Resorts vs. MGIC Investment
Performance |
| Timeline |
| Playa Hotels Resorts |
| MGIC Investment |
Playa Hotels and MGIC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playa Hotels and MGIC Investment
The main advantage of trading using opposite Playa Hotels and MGIC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playa Hotels position performs unexpectedly, MGIC Investment 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 MGIC Investment will offset losses from the drop in MGIC Investment's long position.| Playa Hotels vs. Algonquin Power Utilities | Playa Hotels vs. TYSON FOODS A | Playa Hotels vs. Canadian Utilities Limited | Playa Hotels vs. SCANSOURCE |
| MGIC Investment vs. ELMOS SEMICONDUCTOR | MGIC Investment vs. TRADELINK ELECTRON | MGIC Investment vs. Canon Marketing Japan | MGIC Investment vs. Hua Hong Semiconductor |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |