Correlation Between Magellan Financial and Medibank Private
Can any of the company-specific risk be diversified away by investing in both Magellan Financial and Medibank Private 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 Medibank Private 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 Medibank Private, you can compare the effects of market volatilities on Magellan Financial and Medibank Private 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 Medibank Private. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magellan Financial and Medibank Private.
Diversification Opportunities for Magellan Financial and Medibank Private
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Magellan and Medibank is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Magellan Financial Group and Medibank Private in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medibank Private 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 Medibank Private. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medibank Private has no effect on the direction of Magellan Financial i.e., Magellan Financial and Medibank Private go up and down completely randomly.
Pair Corralation between Magellan Financial and Medibank Private
Assuming the 90 days trading horizon Magellan Financial Group is expected to generate 2.57 times more return on investment than Medibank Private. However, Magellan Financial is 2.57 times more volatile than Medibank Private. It trades about 0.17 of its potential returns per unit of risk. Medibank Private is currently generating about 0.0 per unit of risk. If you would invest 1,028 in Magellan Financial Group on September 15, 2024 and sell it today you would earn a total of 97.00 from holding Magellan Financial Group or generate 9.44% 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. Medibank Private
Performance |
| Timeline |
| Magellan Financial |
| Medibank Private |
Magellan Financial and Medibank Private Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magellan Financial and Medibank Private
The main advantage of trading using opposite Magellan Financial and Medibank Private positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magellan Financial position performs unexpectedly, Medibank Private 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 Medibank Private will offset losses from the drop in Medibank Private's long position.| Magellan Financial vs. Audio Pixels Holdings | Magellan Financial vs. Iodm | Magellan Financial vs. Nsx | Magellan Financial vs. TTG Fintech |
| Medibank Private vs. TPG Telecom | Medibank Private vs. Magellan Financial Group | Medibank Private vs. Macquarie Bank Limited | Medibank Private vs. Perpetual Credit Income |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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