Correlation Between Adriatic Metals and Magellan Financial
Can any of the company-specific risk be diversified away by investing in both Adriatic Metals and Magellan Financial 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 Adriatic Metals and Magellan Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adriatic Metals Plc and Magellan Financial Group, you can compare the effects of market volatilities on Adriatic Metals and Magellan Financial 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 Adriatic Metals with a short position of Magellan Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adriatic Metals and Magellan Financial.
Diversification Opportunities for Adriatic Metals and Magellan Financial
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Adriatic and Magellan is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Adriatic Metals Plc and Magellan Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magellan Financial and Adriatic Metals 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 Adriatic Metals Plc are associated (or correlated) with Magellan Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magellan Financial has no effect on the direction of Adriatic Metals i.e., Adriatic Metals and Magellan Financial go up and down completely randomly.
Pair Corralation between Adriatic Metals and Magellan Financial
Assuming the 90 days trading horizon Adriatic Metals Plc is expected to generate 1.63 times more return on investment than Magellan Financial. However, Adriatic Metals is 1.63 times more volatile than Magellan Financial Group. It trades about 0.05 of its potential returns per unit of risk. Magellan Financial Group is currently generating about 0.07 per unit of risk. If you would invest 312.00 in Adriatic Metals Plc on September 5, 2024 and sell it today you would earn a total of 96.00 from holding Adriatic Metals Plc or generate 30.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Adriatic Metals Plc vs. Magellan Financial Group
Performance |
| Timeline |
| Adriatic Metals Plc |
| Magellan Financial |
Adriatic Metals and Magellan Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adriatic Metals and Magellan Financial
The main advantage of trading using opposite Adriatic Metals and Magellan Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adriatic Metals position performs unexpectedly, Magellan Financial 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 Magellan Financial will offset losses from the drop in Magellan Financial's long position.| Adriatic Metals vs. Premier Investments | Adriatic Metals vs. Auctus Alternative Investments | Adriatic Metals vs. Alternative Investment Trust | Adriatic Metals vs. Carlton Investments |
| Magellan Financial vs. Westpac Banking | Magellan Financial vs. Ecofibre | Magellan Financial vs. Adriatic Metals Plc | Magellan Financial vs. Australian Dairy Farms |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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