Correlation Between Magellan Financial and Garda Diversified
Can any of the company-specific risk be diversified away by investing in both Magellan Financial and Garda Diversified 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 Garda Diversified 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 Garda Diversified Ppty, you can compare the effects of market volatilities on Magellan Financial and Garda Diversified 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 Garda Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magellan Financial and Garda Diversified.
Diversification Opportunities for Magellan Financial and Garda Diversified
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Magellan and Garda is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Magellan Financial Group and Garda Diversified Ppty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garda Diversified Ppty 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 Garda Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garda Diversified Ppty has no effect on the direction of Magellan Financial i.e., Magellan Financial and Garda Diversified go up and down completely randomly.
Pair Corralation between Magellan Financial and Garda Diversified
Assuming the 90 days trading horizon Magellan Financial Group is expected to generate 1.66 times more return on investment than Garda Diversified. However, Magellan Financial is 1.66 times more volatile than Garda Diversified Ppty. It trades about 0.15 of its potential returns per unit of risk. Garda Diversified Ppty is currently generating about -0.09 per unit of risk. If you would invest 1,105 in Magellan Financial Group on October 23, 2024 and sell it today you would earn a total of 46.00 from holding Magellan Financial Group or generate 4.16% 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. Garda Diversified Ppty
Performance |
| Timeline |
| Magellan Financial |
| Garda Diversified Ppty |
Magellan Financial and Garda Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magellan Financial and Garda Diversified
The main advantage of trading using opposite Magellan Financial and Garda Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magellan Financial position performs unexpectedly, Garda Diversified 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 Garda Diversified will offset losses from the drop in Garda Diversified's long position.| Magellan Financial vs. Aneka Tambang Tbk | Magellan Financial vs. Commonwealth Bank of | Magellan Financial vs. Australia and New | Magellan Financial vs. ANZ Group Holdings |
| Garda Diversified vs. Scentre Group | Garda Diversified vs. Vicinity Centres Re | Garda Diversified vs. Charter Hall Retail | Garda Diversified vs. Cromwell Property 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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