Correlation Between Clean Air and Magellan Gold
Can any of the company-specific risk be diversified away by investing in both Clean Air and Magellan Gold 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 Clean Air and Magellan Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clean Air Metals and Magellan Gold Corp, you can compare the effects of market volatilities on Clean Air and Magellan Gold 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 Clean Air with a short position of Magellan Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Air and Magellan Gold.
Diversification Opportunities for Clean Air and Magellan Gold
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Clean and Magellan is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Clean Air Metals and Magellan Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magellan Gold Corp and Clean Air 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 Clean Air Metals are associated (or correlated) with Magellan Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magellan Gold Corp has no effect on the direction of Clean Air i.e., Clean Air and Magellan Gold go up and down completely randomly.
Pair Corralation between Clean Air and Magellan Gold
Assuming the 90 days horizon Clean Air Metals is expected to under-perform the Magellan Gold. In addition to that, Clean Air is 1.49 times more volatile than Magellan Gold Corp. It trades about -0.29 of its total potential returns per unit of risk. Magellan Gold Corp is currently generating about -0.05 per unit of volatility. If you would invest 13.00 in Magellan Gold Corp on August 29, 2024 and sell it today you would lose (1.00) from holding Magellan Gold Corp or give up 7.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clean Air Metals vs. Magellan Gold Corp
Performance |
| Timeline |
| Clean Air Metals |
| Magellan Gold Corp |
Clean Air and Magellan Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clean Air and Magellan Gold
The main advantage of trading using opposite Clean Air and Magellan Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Air position performs unexpectedly, Magellan Gold 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 Gold will offset losses from the drop in Magellan Gold's long position.| Clean Air vs. Morningstar Unconstrained Allocation | Clean Air vs. High Yield Municipal Fund | Clean Air vs. Knife River | Clean Air vs. Klckner Co SE |
| Magellan Gold vs. Morningstar Unconstrained Allocation | Magellan Gold vs. High Yield Municipal Fund | Magellan Gold vs. Knife River | Magellan Gold vs. Klckner Co SE |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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