Correlation Between Magellan Financial and Platinum Asset
Can any of the company-specific risk be diversified away by investing in both Magellan Financial and Platinum Asset 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 Platinum Asset 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 Platinum Asset Management, you can compare the effects of market volatilities on Magellan Financial and Platinum Asset 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 Platinum Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magellan Financial and Platinum Asset.
Diversification Opportunities for Magellan Financial and Platinum Asset
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Magellan and Platinum is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Magellan Financial Group and Platinum Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Asset Management 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 Platinum Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Asset Management has no effect on the direction of Magellan Financial i.e., Magellan Financial and Platinum Asset go up and down completely randomly.
Pair Corralation between Magellan Financial and Platinum Asset
Assuming the 90 days trading horizon Magellan Financial Group is expected to generate 1.02 times more return on investment than Platinum Asset. However, Magellan Financial is 1.02 times more volatile than Platinum Asset Management. It trades about 0.13 of its potential returns per unit of risk. Platinum Asset Management is currently generating about 0.04 per unit of risk. If you would invest 790.00 in Magellan Financial Group on August 29, 2024 and sell it today you would earn a total of 298.00 from holding Magellan Financial Group or generate 37.72% 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. Platinum Asset Management
Performance |
| Timeline |
| Magellan Financial |
| Platinum Asset Management |
Magellan Financial and Platinum Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magellan Financial and Platinum Asset
The main advantage of trading using opposite Magellan Financial and Platinum Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magellan Financial position performs unexpectedly, Platinum Asset 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 Platinum Asset will offset losses from the drop in Platinum Asset's long position.| Magellan Financial vs. Champion Iron | Magellan Financial vs. Ridley | Magellan Financial vs. Peel Mining | Magellan Financial vs. Australian Dairy Farms |
| Platinum Asset vs. Champion Iron | Platinum Asset vs. Ridley | Platinum Asset vs. Peel Mining | Platinum Asset vs. Australian Dairy Farms |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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