Correlation Between Magellan Financial and Step One
Can any of the company-specific risk be diversified away by investing in both Magellan Financial and Step One 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 Step One 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 Step One Clothing, you can compare the effects of market volatilities on Magellan Financial and Step One 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 Step One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magellan Financial and Step One.
Diversification Opportunities for Magellan Financial and Step One
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Magellan and Step is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Magellan Financial Group and Step One Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Step One Clothing 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 Step One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Step One Clothing has no effect on the direction of Magellan Financial i.e., Magellan Financial and Step One go up and down completely randomly.
Pair Corralation between Magellan Financial and Step One
Assuming the 90 days trading horizon Magellan Financial Group is expected to generate 0.7 times more return on investment than Step One. However, Magellan Financial Group is 1.44 times less risky than Step One. It trades about -0.09 of its potential returns per unit of risk. Step One Clothing is currently generating about -0.43 per unit of risk. If you would invest 1,108 in Magellan Financial Group on October 12, 2024 and sell it today you would lose (27.00) from holding Magellan Financial Group or give up 2.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magellan Financial Group vs. Step One Clothing
Performance |
| Timeline |
| Magellan Financial |
| Step One Clothing |
Magellan Financial and Step One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magellan Financial and Step One
The main advantage of trading using opposite Magellan Financial and Step One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magellan Financial position performs unexpectedly, Step One 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 Step One will offset losses from the drop in Step One's long position.| Magellan Financial vs. Credit Clear | Magellan Financial vs. ARN Media Limited | Magellan Financial vs. Commonwealth Bank of | Magellan Financial vs. Kkr Credit Income |
| Step One vs. Kkr Credit Income | Step One vs. Magellan Financial Group | Step One vs. Liberty Financial Group | Step One vs. Iron Road |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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