Correlation Between Magellan Financial and IGO
Can any of the company-specific risk be diversified away by investing in both Magellan Financial and IGO 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 IGO 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 IGO, you can compare the effects of market volatilities on Magellan Financial and IGO 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 IGO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magellan Financial and IGO.
Diversification Opportunities for Magellan Financial and IGO
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Magellan and IGO is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Magellan Financial Group and IGO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGO 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 IGO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IGO has no effect on the direction of Magellan Financial i.e., Magellan Financial and IGO go up and down completely randomly.
Pair Corralation between Magellan Financial and IGO
Assuming the 90 days trading horizon Magellan Financial Group is expected to generate 1.01 times more return on investment than IGO. However, Magellan Financial is 1.01 times more volatile than IGO. It trades about 0.11 of its potential returns per unit of risk. IGO is currently generating about -0.05 per unit of risk. If you would invest 976.00 in Magellan Financial Group on August 25, 2024 and sell it today you would earn a total of 96.00 from holding Magellan Financial Group or generate 9.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magellan Financial Group vs. IGO
Performance |
| Timeline |
| Magellan Financial |
| IGO |
Magellan Financial and IGO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magellan Financial and IGO
The main advantage of trading using opposite Magellan Financial and IGO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magellan Financial position performs unexpectedly, IGO 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 IGO will offset losses from the drop in IGO's long position.| Magellan Financial vs. National Australia Bank | Magellan Financial vs. National Australia Bank | Magellan Financial vs. Westpac Banking | Magellan Financial vs. National Australia Bank |
| IGO vs. Advanced Braking Technology | IGO vs. Bank of Queensland | IGO vs. Magellan Financial Group | IGO vs. Genetic Technologies |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |