Correlation Between Credit Clear and Magellan Financial
Can any of the company-specific risk be diversified away by investing in both Credit Clear 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 Credit Clear and Magellan Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Credit Clear and Magellan Financial Group, you can compare the effects of market volatilities on Credit Clear 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 Credit Clear with a short position of Magellan Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credit Clear and Magellan Financial.
Diversification Opportunities for Credit Clear and Magellan Financial
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Credit and Magellan is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Credit Clear and Magellan Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magellan Financial and Credit Clear 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 Credit Clear 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 Credit Clear i.e., Credit Clear and Magellan Financial go up and down completely randomly.
Pair Corralation between Credit Clear and Magellan Financial
Assuming the 90 days trading horizon Credit Clear is expected to generate 1.46 times less return on investment than Magellan Financial. In addition to that, Credit Clear is 1.61 times more volatile than Magellan Financial Group. It trades about 0.02 of its total potential returns per unit of risk. Magellan Financial Group is currently generating about 0.04 per unit of volatility. If you would invest 795.00 in Magellan Financial Group on August 29, 2024 and sell it today you would earn a total of 293.00 from holding Magellan Financial Group or generate 36.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Credit Clear vs. Magellan Financial Group
Performance |
| Timeline |
| Credit Clear |
| Magellan Financial |
Credit Clear and Magellan Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Credit Clear and Magellan Financial
The main advantage of trading using opposite Credit Clear and Magellan Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Credit Clear 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.| Credit Clear vs. PVW Resources | Credit Clear vs. Woolworths | Credit Clear vs. Wesfarmers | Credit Clear vs. Coles Group |
| Magellan Financial vs. Champion Iron | Magellan Financial vs. Ridley | Magellan Financial vs. Peel Mining | 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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