Correlation Between Magellan Financial and MA Financial
Can any of the company-specific risk be diversified away by investing in both Magellan Financial and MA 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 MA 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 MA Financial Group, you can compare the effects of market volatilities on Magellan Financial and MA 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 MA Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magellan Financial and MA Financial.
Diversification Opportunities for Magellan Financial and MA Financial
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Magellan and MAF is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Magellan Financial Group and MA Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MA Financial Group 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 MA Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MA Financial Group has no effect on the direction of Magellan Financial i.e., Magellan Financial and MA Financial go up and down completely randomly.
Pair Corralation between Magellan Financial and MA Financial
Assuming the 90 days trading horizon Magellan Financial is expected to generate 1.02 times less return on investment than MA Financial. But when comparing it to its historical volatility, Magellan Financial Group is 1.11 times less risky than MA Financial. It trades about 0.11 of its potential returns per unit of risk. MA Financial Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 468.00 in MA Financial Group on August 30, 2024 and sell it today you would earn a total of 152.00 from holding MA Financial Group or generate 32.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magellan Financial Group vs. MA Financial Group
Performance |
| Timeline |
| Magellan Financial |
| MA Financial Group |
Magellan Financial and MA Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magellan Financial and MA Financial
The main advantage of trading using opposite Magellan Financial and MA Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magellan Financial position performs unexpectedly, MA 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 MA Financial will offset losses from the drop in MA Financial's long position.| Magellan Financial vs. K2 Asset Management | Magellan Financial vs. BKI Investment | Magellan Financial vs. Alternative Investment Trust | Magellan Financial vs. Iron Road |
| MA Financial vs. Nova Eye Medical | MA Financial vs. Charter Hall Education | MA Financial vs. ABACUS STORAGE KING | MA Financial vs. Alto Metals |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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