Correlation Between Globe Metals and Magellan Financial
Can any of the company-specific risk be diversified away by investing in both Globe Metals 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 Globe Metals and Magellan Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globe Metals Mining and Magellan Financial Group, you can compare the effects of market volatilities on Globe Metals 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 Globe Metals with a short position of Magellan Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Metals and Magellan Financial.
Diversification Opportunities for Globe Metals and Magellan Financial
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Globe and Magellan is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Globe Metals Mining and Magellan Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magellan Financial and Globe Metals 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 Globe Metals Mining 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 Globe Metals i.e., Globe Metals and Magellan Financial go up and down completely randomly.
Pair Corralation between Globe Metals and Magellan Financial
Assuming the 90 days trading horizon Globe Metals Mining is expected to under-perform the Magellan Financial. In addition to that, Globe Metals is 1.37 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 -0.06 per unit of volatility. If you would invest 1,103 in Magellan Financial Group on November 3, 2024 and sell it today you would lose (52.00) from holding Magellan Financial Group or give up 4.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globe Metals Mining vs. Magellan Financial Group
Performance |
| Timeline |
| Globe Metals Mining |
| Magellan Financial |
Globe Metals and Magellan Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globe Metals and Magellan Financial
The main advantage of trading using opposite Globe Metals and Magellan Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globe Metals 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.| Globe Metals vs. Australian Strategic Materials | Globe Metals vs. High Tech Metals | Globe Metals vs. Genetic Technologies | Globe Metals vs. Technology One |
| Magellan Financial vs. Kip McGrath Education | Magellan Financial vs. Clime Investment Management | Magellan Financial vs. Autosports Group | Magellan Financial vs. Qbe Insurance Group |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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