Correlation Between Magellan Financial and Boss Energy
Can any of the company-specific risk be diversified away by investing in both Magellan Financial and Boss Energy 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 Magellan Financial and Boss Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magellan Financial Group and Boss Energy Limited, you can compare the effects of market volatilities on Magellan Financial and Boss Energy 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 Magellan Financial with a short position of Boss Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magellan Financial and Boss Energy.
Diversification Opportunities for Magellan Financial and Boss Energy
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Magellan and Boss is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Magellan Financial Group and Boss Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boss Energy Limited and Magellan 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 Magellan Financial Group are associated (or correlated) with Boss Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boss Energy Limited has no effect on the direction of Magellan Financial i.e., Magellan Financial and Boss Energy go up and down completely randomly.
Pair Corralation between Magellan Financial and Boss Energy
Assuming the 90 days trading horizon Magellan Financial Group is expected to generate 0.76 times more return on investment than Boss Energy. However, Magellan Financial Group is 1.31 times less risky than Boss Energy. It trades about 0.04 of its potential returns per unit of risk. Boss Energy Limited is currently generating about 0.03 per unit of risk. If you would invest 783.00 in Magellan Financial Group on September 5, 2024 and sell it today you would earn a total of 344.00 from holding Magellan Financial Group or generate 43.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magellan Financial Group vs. Boss Energy Limited
Performance |
| Timeline |
| Magellan Financial |
| Boss Energy Limited |
Magellan Financial and Boss Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magellan Financial and Boss Energy
The main advantage of trading using opposite Magellan Financial and Boss Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magellan Financial position performs unexpectedly, Boss Energy 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 Boss Energy will offset losses from the drop in Boss Energy's long position.| Magellan Financial vs. Westpac Banking | Magellan Financial vs. Ecofibre | Magellan Financial vs. Adriatic Metals Plc | Magellan Financial vs. Australian Dairy Farms |
| Boss Energy vs. Retail Food Group | Boss Energy vs. Bell Financial Group | Boss Energy vs. Qbe Insurance Group | Boss Energy vs. Magellan Financial 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |