Correlation Between Magellan Financial and Duxton Broadacre
Can any of the company-specific risk be diversified away by investing in both Magellan Financial and Duxton Broadacre 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 Duxton Broadacre 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 Duxton Broadacre Farms, you can compare the effects of market volatilities on Magellan Financial and Duxton Broadacre 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 Duxton Broadacre. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magellan Financial and Duxton Broadacre.
Diversification Opportunities for Magellan Financial and Duxton Broadacre
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Magellan and Duxton is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Magellan Financial Group and Duxton Broadacre Farms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duxton Broadacre Farms 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 Duxton Broadacre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duxton Broadacre Farms has no effect on the direction of Magellan Financial i.e., Magellan Financial and Duxton Broadacre go up and down completely randomly.
Pair Corralation between Magellan Financial and Duxton Broadacre
Assuming the 90 days trading horizon Magellan Financial Group is expected to generate 1.48 times more return on investment than Duxton Broadacre. However, Magellan Financial is 1.48 times more volatile than Duxton Broadacre Farms. It trades about 0.08 of its potential returns per unit of risk. Duxton Broadacre Farms is currently generating about -0.22 per unit of risk. If you would invest 1,105 in Magellan Financial Group on October 22, 2024 and sell it today you would earn a total of 23.00 from holding Magellan Financial Group or generate 2.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magellan Financial Group vs. Duxton Broadacre Farms
Performance |
| Timeline |
| Magellan Financial |
| Duxton Broadacre Farms |
Magellan Financial and Duxton Broadacre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magellan Financial and Duxton Broadacre
The main advantage of trading using opposite Magellan Financial and Duxton Broadacre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magellan Financial position performs unexpectedly, Duxton Broadacre 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 Duxton Broadacre will offset losses from the drop in Duxton Broadacre's long position.| Magellan Financial vs. Legacy Iron Ore | Magellan Financial vs. Home Consortium | Magellan Financial vs. Actinogen Medical | Magellan Financial vs. Land Homes Group |
| Duxton Broadacre vs. TPG Telecom | Duxton Broadacre vs. Neurotech International | Duxton Broadacre vs. Hansen Technologies | Duxton Broadacre vs. Infomedia |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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