Correlation Between Magellan Financial and People Infrastructure
Can any of the company-specific risk be diversified away by investing in both Magellan Financial and People Infrastructure 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 People Infrastructure 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 People Infrastructure, you can compare the effects of market volatilities on Magellan Financial and People Infrastructure 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 People Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magellan Financial and People Infrastructure.
Diversification Opportunities for Magellan Financial and People Infrastructure
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Magellan and People is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Magellan Financial Group and People Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on People Infrastructure 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 People Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of People Infrastructure has no effect on the direction of Magellan Financial i.e., Magellan Financial and People Infrastructure go up and down completely randomly.
Pair Corralation between Magellan Financial and People Infrastructure
Assuming the 90 days trading horizon Magellan Financial is expected to generate 1.97 times less return on investment than People Infrastructure. In addition to that, Magellan Financial is 1.04 times more volatile than People Infrastructure. It trades about 0.18 of its total potential returns per unit of risk. People Infrastructure is currently generating about 0.38 per unit of volatility. If you would invest 81.00 in People Infrastructure on September 14, 2024 and sell it today you would earn a total of 18.00 from holding People Infrastructure or generate 22.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magellan Financial Group vs. People Infrastructure
Performance |
| Timeline |
| Magellan Financial |
| People Infrastructure |
Magellan Financial and People Infrastructure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magellan Financial and People Infrastructure
The main advantage of trading using opposite Magellan Financial and People Infrastructure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magellan Financial position performs unexpectedly, People Infrastructure 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 People Infrastructure will offset losses from the drop in People Infrastructure's long position.| Magellan Financial vs. Audio Pixels Holdings | Magellan Financial vs. Iodm | Magellan Financial vs. Nsx | Magellan Financial vs. TTG Fintech |
| People Infrastructure vs. Insignia Financial | People Infrastructure vs. Magellan Financial Group | People Infrastructure vs. Aurelia Metals | People Infrastructure vs. Black Rock Mining |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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