Correlation Between Magic Empire and Castellum
Can any of the company-specific risk be diversified away by investing in both Magic Empire and Castellum 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 Magic Empire and Castellum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magic Empire Global and Castellum, you can compare the effects of market volatilities on Magic Empire and Castellum 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 Magic Empire with a short position of Castellum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Empire and Castellum.
Diversification Opportunities for Magic Empire and Castellum
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Magic and Castellum is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Magic Empire Global and Castellum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Castellum and Magic Empire 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 Magic Empire Global are associated (or correlated) with Castellum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Castellum has no effect on the direction of Magic Empire i.e., Magic Empire and Castellum go up and down completely randomly.
Pair Corralation between Magic Empire and Castellum
Given the investment horizon of 90 days Magic Empire Global is expected to under-perform the Castellum. But the stock apears to be less risky and, when comparing its historical volatility, Magic Empire Global is 1.05 times less risky than Castellum. The stock trades about -0.02 of its potential returns per unit of risk. The Castellum is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 22.00 in Castellum on August 26, 2024 and sell it today you would lose (6.00) from holding Castellum or give up 27.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magic Empire Global vs. Castellum
Performance |
| Timeline |
| Magic Empire Global |
| Castellum |
Magic Empire and Castellum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magic Empire and Castellum
The main advantage of trading using opposite Magic Empire and Castellum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Empire position performs unexpectedly, Castellum 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 Castellum will offset losses from the drop in Castellum's long position.| Magic Empire vs. Netcapital | Magic Empire vs. Applied Blockchain | Magic Empire vs. Zhong Yang Financial | Magic Empire vs. Mercurity Fintech Holding |
| Castellum vs. Magic Empire Global | Castellum vs. Zhong Yang Financial | Castellum vs. Netcapital | Castellum vs. Lazard |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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