Correlation Between Finexia Financial and Medibank Private
Can any of the company-specific risk be diversified away by investing in both Finexia Financial and Medibank Private 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 Finexia Financial and Medibank Private into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finexia Financial Group and Medibank Private, you can compare the effects of market volatilities on Finexia Financial and Medibank Private 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 Finexia Financial with a short position of Medibank Private. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finexia Financial and Medibank Private.
Diversification Opportunities for Finexia Financial and Medibank Private
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Finexia and Medibank is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Finexia Financial Group and Medibank Private in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medibank Private and Finexia Financial 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 Finexia Financial Group are associated (or correlated) with Medibank Private. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medibank Private has no effect on the direction of Finexia Financial i.e., Finexia Financial and Medibank Private go up and down completely randomly.
Pair Corralation between Finexia Financial and Medibank Private
Assuming the 90 days trading horizon Finexia Financial Group is expected to generate 3.34 times more return on investment than Medibank Private. However, Finexia Financial is 3.34 times more volatile than Medibank Private. It trades about 0.05 of its potential returns per unit of risk. Medibank Private is currently generating about 0.17 per unit of risk. If you would invest 27.00 in Finexia Financial Group on November 1, 2024 and sell it today you would earn a total of 2.00 from holding Finexia Financial Group or generate 7.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finexia Financial Group vs. Medibank Private
Performance |
| Timeline |
| Finexia Financial |
| Medibank Private |
Finexia Financial and Medibank Private Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finexia Financial and Medibank Private
The main advantage of trading using opposite Finexia Financial and Medibank Private positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finexia Financial position performs unexpectedly, Medibank Private 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 Medibank Private will offset losses from the drop in Medibank Private's long position.| Finexia Financial vs. Zoom2u Technologies | Finexia Financial vs. WiseTech Global Limited | Finexia Financial vs. Macquarie Technology Group | Finexia Financial vs. Duxton Broadacre Farms |
| Medibank Private vs. COAST ENTERTAINMENT HOLDINGS | Medibank Private vs. Nine Entertainment Co | Medibank Private vs. Peel Mining | Medibank Private vs. Perseus Mining |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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