Correlation Between Astar and Magellan Financial
Can any of the company-specific risk be diversified away by investing in both Astar 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 Astar and Magellan Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astar and Magellan Financial Group, you can compare the effects of market volatilities on Astar 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 Astar with a short position of Magellan Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and Magellan Financial.
Diversification Opportunities for Astar and Magellan Financial
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Astar and Magellan is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Magellan Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magellan Financial and Astar 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 Astar 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 Astar i.e., Astar and Magellan Financial go up and down completely randomly.
Pair Corralation between Astar and Magellan Financial
Assuming the 90 days trading horizon Astar is expected to under-perform the Magellan Financial. In addition to that, Astar is 2.23 times more volatile than Magellan Financial Group. It trades about -0.04 of its total potential returns per unit of risk. Magellan Financial Group is currently generating about 0.05 per unit of volatility. If you would invest 849.00 in Magellan Financial Group on November 2, 2024 and sell it today you would earn a total of 202.00 from holding Magellan Financial Group or generate 23.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 72.91% |
| Values | Daily Returns |
Astar vs. Magellan Financial Group
Performance |
| Timeline |
| Astar |
| Magellan Financial |
Astar and Magellan Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astar and Magellan Financial
The main advantage of trading using opposite Astar and Magellan Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astar 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.The idea behind Astar and Magellan Financial Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Magellan Financial vs. Hutchison Telecommunications | Magellan Financial vs. Ainsworth Game Technology | Magellan Financial vs. Aeon Metals | Magellan Financial vs. Sky Metals |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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