Correlation Between EROAD and Magellan Financial
Can any of the company-specific risk be diversified away by investing in both EROAD 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 EROAD and Magellan Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EROAD and Magellan Financial Group, you can compare the effects of market volatilities on EROAD 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 EROAD with a short position of Magellan Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of EROAD and Magellan Financial.
Diversification Opportunities for EROAD and Magellan Financial
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between EROAD and Magellan is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding EROAD and Magellan Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magellan Financial and EROAD 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 EROAD 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 EROAD i.e., EROAD and Magellan Financial go up and down completely randomly.
Pair Corralation between EROAD and Magellan Financial
Assuming the 90 days trading horizon EROAD is expected to generate 0.77 times more return on investment than Magellan Financial. However, EROAD is 1.3 times less risky than Magellan Financial. It trades about 0.14 of its potential returns per unit of risk. Magellan Financial Group is currently generating about 0.08 per unit of risk. If you would invest 80.00 in EROAD on September 13, 2024 and sell it today you would earn a total of 5.00 from holding EROAD or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EROAD vs. Magellan Financial Group
Performance |
| Timeline |
| EROAD |
| Magellan Financial |
EROAD and Magellan Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EROAD and Magellan Financial
The main advantage of trading using opposite EROAD and Magellan Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EROAD 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.| EROAD vs. Minbos Resources | EROAD vs. Tlou Energy | EROAD vs. Encounter Resources | EROAD vs. Elevate Uranium |
| Magellan Financial vs. Energy Technologies Limited | Magellan Financial vs. WiseTech Global Limited | Magellan Financial vs. Environmental Clean Technologies | Magellan Financial vs. EROAD |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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