Correlation Between Magellan Financial and Finexia Financial
Can any of the company-specific risk be diversified away by investing in both Magellan Financial and Finexia 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 Magellan Financial and Finexia Financial 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 Finexia Financial Group, you can compare the effects of market volatilities on Magellan Financial and Finexia 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 Magellan Financial with a short position of Finexia Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magellan Financial and Finexia Financial.
Diversification Opportunities for Magellan Financial and Finexia Financial
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Magellan and Finexia is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Magellan Financial Group and Finexia Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finexia Financial 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 Finexia Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finexia Financial has no effect on the direction of Magellan Financial i.e., Magellan Financial and Finexia Financial go up and down completely randomly.
Pair Corralation between Magellan Financial and Finexia Financial
Assuming the 90 days trading horizon Magellan Financial Group is expected to generate 0.56 times more return on investment than Finexia Financial. However, Magellan Financial Group is 1.79 times less risky than Finexia Financial. It trades about 0.13 of its potential returns per unit of risk. Finexia Financial Group is currently generating about 0.06 per unit of risk. If you would invest 790.00 in Magellan Financial Group on August 29, 2024 and sell it today you would earn a total of 298.00 from holding Magellan Financial Group or generate 37.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magellan Financial Group vs. Finexia Financial Group
Performance |
| Timeline |
| Magellan Financial |
| Finexia Financial |
Magellan Financial and Finexia Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magellan Financial and Finexia Financial
The main advantage of trading using opposite Magellan Financial and Finexia Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magellan Financial position performs unexpectedly, Finexia 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 Finexia Financial will offset losses from the drop in Finexia Financial's long position.| Magellan Financial vs. Champion Iron | Magellan Financial vs. Ridley | Magellan Financial vs. Peel Mining | Magellan Financial vs. Australian Dairy Farms |
| Finexia Financial vs. Champion Iron | Finexia Financial vs. Ridley | Finexia Financial vs. Peel Mining | Finexia Financial vs. Australian Dairy Farms |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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