Correlation Between Magellan Financial and Mystate
Can any of the company-specific risk be diversified away by investing in both Magellan Financial and Mystate 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 Mystate 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 Mystate, you can compare the effects of market volatilities on Magellan Financial and Mystate 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 Mystate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magellan Financial and Mystate.
Diversification Opportunities for Magellan Financial and Mystate
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Magellan and Mystate is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Magellan Financial Group and Mystate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mystate 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 Mystate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mystate has no effect on the direction of Magellan Financial i.e., Magellan Financial and Mystate go up and down completely randomly.
Pair Corralation between Magellan Financial and Mystate
Assuming the 90 days trading horizon Magellan Financial is expected to generate 1.32 times less return on investment than Mystate. In addition to that, Magellan Financial is 1.62 times more volatile than Mystate. It trades about 0.13 of its total potential returns per unit of risk. Mystate is currently generating about 0.28 per unit of volatility. If you would invest 378.00 in Mystate on September 4, 2024 and sell it today you would earn a total of 33.00 from holding Mystate or generate 8.73% 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. Mystate
Performance |
| Timeline |
| Magellan Financial |
| Mystate |
Magellan Financial and Mystate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magellan Financial and Mystate
The main advantage of trading using opposite Magellan Financial and Mystate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magellan Financial position performs unexpectedly, Mystate 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 Mystate will offset losses from the drop in Mystate's long position.| Magellan Financial vs. Westpac Banking | Magellan Financial vs. Ecofibre | Magellan Financial vs. Adriatic Metals Plc | Magellan Financial vs. Australian Dairy Farms |
| Mystate vs. Magellan Financial Group | Mystate vs. Pioneer Credit | Mystate vs. Lendlease Group | Mystate vs. Westpac Banking |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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