Correlation Between Flagship Investments and Magellan Financial
Can any of the company-specific risk be diversified away by investing in both Flagship Investments 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 Flagship Investments and Magellan Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flagship Investments and Magellan Financial Group, you can compare the effects of market volatilities on Flagship Investments 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 Flagship Investments with a short position of Magellan Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flagship Investments and Magellan Financial.
Diversification Opportunities for Flagship Investments and Magellan Financial
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Flagship and Magellan is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Flagship Investments and Magellan Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magellan Financial and Flagship Investments 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 Flagship Investments 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 Flagship Investments i.e., Flagship Investments and Magellan Financial go up and down completely randomly.
Pair Corralation between Flagship Investments and Magellan Financial
Assuming the 90 days trading horizon Flagship Investments is expected to generate 8.74 times less return on investment than Magellan Financial. But when comparing it to its historical volatility, Flagship Investments is 2.85 times less risky than Magellan Financial. It trades about 0.08 of its potential returns per unit of risk. Magellan Financial Group is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,121 in Magellan Financial Group on October 30, 2024 and sell it today you would earn a total of 97.00 from holding Magellan Financial Group or generate 8.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flagship Investments vs. Magellan Financial Group
Performance |
| Timeline |
| Flagship Investments |
| Magellan Financial |
Flagship Investments and Magellan Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flagship Investments and Magellan Financial
The main advantage of trading using opposite Flagship Investments and Magellan Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flagship Investments 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.| Flagship Investments vs. Wt Financial Group | Flagship Investments vs. Sports Entertainment Group | Flagship Investments vs. Finexia Financial Group | Flagship Investments vs. Qbe Insurance Group |
| Magellan Financial vs. Maggie Beer Holdings | Magellan Financial vs. Hutchison Telecommunications | Magellan Financial vs. Dexus Convenience Retail | Magellan Financial vs. Cleanaway Waste Management |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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