Correlation Between Champion Iron and Magellan Financial
Can any of the company-specific risk be diversified away by investing in both Champion Iron 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 Champion Iron and Magellan Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champion Iron and Magellan Financial Group, you can compare the effects of market volatilities on Champion Iron 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 Champion Iron with a short position of Magellan Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Iron and Magellan Financial.
Diversification Opportunities for Champion Iron and Magellan Financial
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Champion and Magellan is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Champion Iron and Magellan Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magellan Financial and Champion Iron 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 Champion Iron 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 Champion Iron i.e., Champion Iron and Magellan Financial go up and down completely randomly.
Pair Corralation between Champion Iron and Magellan Financial
Assuming the 90 days trading horizon Champion Iron is expected to generate 10.93 times less return on investment than Magellan Financial. In addition to that, Champion Iron is 1.31 times more volatile than Magellan Financial Group. It trades about 0.0 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 1,076 in Magellan Financial Group on September 1, 2024 and sell it today you would earn a total of 17.00 from holding Magellan Financial Group or generate 1.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Champion Iron vs. Magellan Financial Group
Performance |
| Timeline |
| Champion Iron |
| Magellan Financial |
Champion Iron and Magellan Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champion Iron and Magellan Financial
The main advantage of trading using opposite Champion Iron and Magellan Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champion Iron 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.| Champion Iron vs. Dicker Data | Champion Iron vs. Data3 | Champion Iron vs. Retail Food Group | Champion Iron vs. Charter Hall Retail |
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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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