Correlation Between Magellan Financial and Whitehaven Coal
Can any of the company-specific risk be diversified away by investing in both Magellan Financial and Whitehaven Coal 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 Whitehaven Coal 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 Whitehaven Coal, you can compare the effects of market volatilities on Magellan Financial and Whitehaven Coal 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 Whitehaven Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magellan Financial and Whitehaven Coal.
Diversification Opportunities for Magellan Financial and Whitehaven Coal
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Magellan and Whitehaven is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Magellan Financial Group and Whitehaven Coal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitehaven Coal 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 Whitehaven Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitehaven Coal has no effect on the direction of Magellan Financial i.e., Magellan Financial and Whitehaven Coal go up and down completely randomly.
Pair Corralation between Magellan Financial and Whitehaven Coal
Assuming the 90 days trading horizon Magellan Financial Group is expected to under-perform the Whitehaven Coal. In addition to that, Magellan Financial is 1.5 times more volatile than Whitehaven Coal. It trades about -0.04 of its total potential returns per unit of risk. Whitehaven Coal is currently generating about -0.03 per unit of volatility. If you would invest 624.00 in Whitehaven Coal on November 4, 2024 and sell it today you would lose (12.00) from holding Whitehaven Coal or give up 1.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magellan Financial Group vs. Whitehaven Coal
Performance |
| Timeline |
| Magellan Financial |
| Whitehaven Coal |
Magellan Financial and Whitehaven Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magellan Financial and Whitehaven Coal
The main advantage of trading using opposite Magellan Financial and Whitehaven Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magellan Financial position performs unexpectedly, Whitehaven Coal 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 Whitehaven Coal will offset losses from the drop in Whitehaven Coal's long position.| Magellan Financial vs. Kip McGrath Education | Magellan Financial vs. Clime Investment Management | Magellan Financial vs. Autosports Group | Magellan Financial vs. Qbe Insurance Group |
| Whitehaven Coal vs. MetalsGrove Mining | Whitehaven Coal vs. Sayona Mining | Whitehaven Coal vs. K2 Asset Management | Whitehaven Coal vs. Diversified United Investment |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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