Correlation Between Magellan Financial and Mount Gibson
Can any of the company-specific risk be diversified away by investing in both Magellan Financial and Mount Gibson 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 Mount Gibson 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 Mount Gibson Iron, you can compare the effects of market volatilities on Magellan Financial and Mount Gibson 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 Mount Gibson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magellan Financial and Mount Gibson.
Diversification Opportunities for Magellan Financial and Mount Gibson
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Magellan and Mount is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Magellan Financial Group and Mount Gibson Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mount Gibson Iron 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 Mount Gibson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mount Gibson Iron has no effect on the direction of Magellan Financial i.e., Magellan Financial and Mount Gibson go up and down completely randomly.
Pair Corralation between Magellan Financial and Mount Gibson
Assuming the 90 days trading horizon Magellan Financial is expected to generate 4.31 times less return on investment than Mount Gibson. But when comparing it to its historical volatility, Magellan Financial Group is 1.06 times less risky than Mount Gibson. It trades about 0.08 of its potential returns per unit of risk. Mount Gibson Iron is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 30.00 in Mount Gibson Iron on October 22, 2024 and sell it today you would earn a total of 3.00 from holding Mount Gibson Iron or generate 10.0% 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. Mount Gibson Iron
Performance |
| Timeline |
| Magellan Financial |
| Mount Gibson Iron |
Magellan Financial and Mount Gibson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magellan Financial and Mount Gibson
The main advantage of trading using opposite Magellan Financial and Mount Gibson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magellan Financial position performs unexpectedly, Mount Gibson 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 Mount Gibson will offset losses from the drop in Mount Gibson's long position.| Magellan Financial vs. Legacy Iron Ore | Magellan Financial vs. Home Consortium | Magellan Financial vs. Actinogen Medical | Magellan Financial vs. Land Homes Group |
| Mount Gibson vs. Talisman Mining | Mount Gibson vs. Peel Mining | Mount Gibson vs. Duketon Mining | Mount Gibson vs. Cleanaway Waste Management |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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