Correlation Between Mount Gibson and Medibank Private
Can any of the company-specific risk be diversified away by investing in both Mount Gibson and Medibank Private 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 Mount Gibson and Medibank Private into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mount Gibson Iron and Medibank Private, you can compare the effects of market volatilities on Mount Gibson and Medibank Private 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 Mount Gibson with a short position of Medibank Private. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mount Gibson and Medibank Private.
Diversification Opportunities for Mount Gibson and Medibank Private
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mount and Medibank is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Mount Gibson Iron and Medibank Private in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medibank Private and Mount Gibson 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 Mount Gibson Iron are associated (or correlated) with Medibank Private. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medibank Private has no effect on the direction of Mount Gibson i.e., Mount Gibson and Medibank Private go up and down completely randomly.
Pair Corralation between Mount Gibson and Medibank Private
Assuming the 90 days trading horizon Mount Gibson Iron is expected to generate 3.3 times more return on investment than Medibank Private. However, Mount Gibson is 3.3 times more volatile than Medibank Private. It trades about 0.08 of its potential returns per unit of risk. Medibank Private is currently generating about 0.0 per unit of risk. If you would invest 31.00 in Mount Gibson Iron on October 30, 2024 and sell it today you would earn a total of 2.00 from holding Mount Gibson Iron or generate 6.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mount Gibson Iron vs. Medibank Private
Performance |
| Timeline |
| Mount Gibson Iron |
| Medibank Private |
Mount Gibson and Medibank Private Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mount Gibson and Medibank Private
The main advantage of trading using opposite Mount Gibson and Medibank Private positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mount Gibson position performs unexpectedly, Medibank Private 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 Medibank Private will offset losses from the drop in Medibank Private's long position.| Mount Gibson vs. Red Hill Iron | Mount Gibson vs. Dexus Convenience Retail | Mount Gibson vs. Ainsworth Game Technology | Mount Gibson vs. Phoslock Environmental Technologies |
| Medibank Private vs. Perseus Mining | Medibank Private vs. Homeco Daily Needs | Medibank Private vs. Home Consortium | Medibank Private vs. Andean Silver Limited |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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