Correlation Between Dug Technology and Magellan Financial
Can any of the company-specific risk be diversified away by investing in both Dug Technology 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 Dug Technology and Magellan Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dug Technology and Magellan Financial Group, you can compare the effects of market volatilities on Dug Technology 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 Dug Technology with a short position of Magellan Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dug Technology and Magellan Financial.
Diversification Opportunities for Dug Technology and Magellan Financial
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dug and Magellan is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Dug Technology and Magellan Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magellan Financial and Dug Technology 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 Dug Technology 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 Dug Technology i.e., Dug Technology and Magellan Financial go up and down completely randomly.
Pair Corralation between Dug Technology and Magellan Financial
Assuming the 90 days trading horizon Dug Technology is expected to under-perform the Magellan Financial. In addition to that, Dug Technology is 2.0 times more volatile than Magellan Financial Group. It trades about -0.1 of its total potential returns per unit of risk. Magellan Financial Group is currently generating about -0.01 per unit of volatility. If you would invest 1,089 in Magellan Financial Group on August 30, 2024 and sell it today you would lose (9.00) from holding Magellan Financial Group or give up 0.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dug Technology vs. Magellan Financial Group
Performance |
| Timeline |
| Dug Technology |
| Magellan Financial |
Dug Technology and Magellan Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dug Technology and Magellan Financial
The main advantage of trading using opposite Dug Technology and Magellan Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dug Technology 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.| Dug Technology vs. Westpac Banking | Dug Technology vs. Ecofibre | Dug Technology vs. iShares Global Healthcare | Dug Technology vs. Adriatic Metals Plc |
| Magellan Financial vs. K2 Asset Management | Magellan Financial vs. BKI Investment | Magellan Financial vs. Alternative Investment Trust | Magellan Financial vs. Iron Road |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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