Correlation Between Magellan Financial and Dexus Convenience
Can any of the company-specific risk be diversified away by investing in both Magellan Financial and Dexus Convenience 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 Dexus Convenience 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 Dexus Convenience Retail, you can compare the effects of market volatilities on Magellan Financial and Dexus Convenience 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 Dexus Convenience. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magellan Financial and Dexus Convenience.
Diversification Opportunities for Magellan Financial and Dexus Convenience
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Magellan and Dexus is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Magellan Financial Group and Dexus Convenience Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dexus Convenience Retail 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 Dexus Convenience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dexus Convenience Retail has no effect on the direction of Magellan Financial i.e., Magellan Financial and Dexus Convenience go up and down completely randomly.
Pair Corralation between Magellan Financial and Dexus Convenience
Assuming the 90 days trading horizon Magellan Financial Group is expected to generate 1.84 times more return on investment than Dexus Convenience. However, Magellan Financial is 1.84 times more volatile than Dexus Convenience Retail. It trades about 0.04 of its potential returns per unit of risk. Dexus Convenience Retail is currently generating about 0.03 per unit of risk. If you would invest 798.00 in Magellan Financial Group on October 21, 2024 and sell it today you would earn a total of 330.00 from holding Magellan Financial Group or generate 41.35% 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. Dexus Convenience Retail
Performance |
| Timeline |
| Magellan Financial |
| Dexus Convenience Retail |
Magellan Financial and Dexus Convenience Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magellan Financial and Dexus Convenience
The main advantage of trading using opposite Magellan Financial and Dexus Convenience positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magellan Financial position performs unexpectedly, Dexus Convenience 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 Dexus Convenience will offset losses from the drop in Dexus Convenience's long position.| Magellan Financial vs. Pinnacle Investment Management | Magellan Financial vs. Saferoads Holdings | Magellan Financial vs. Auctus Alternative Investments | Magellan Financial vs. Super Retail Group |
| Dexus Convenience vs. Genetic Technologies | Dexus Convenience vs. Ras Technology Holdings | Dexus Convenience vs. Legacy Iron Ore | Dexus Convenience vs. Lendlease 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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