Correlation Between Magnis Energy and RedFlow
Can any of the company-specific risk be diversified away by investing in both Magnis Energy and RedFlow 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 Magnis Energy and RedFlow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magnis Energy Technologies and RedFlow Limited, you can compare the effects of market volatilities on Magnis Energy and RedFlow 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 Magnis Energy with a short position of RedFlow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnis Energy and RedFlow.
Diversification Opportunities for Magnis Energy and RedFlow
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Magnis and RedFlow is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Magnis Energy Technologies and RedFlow Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RedFlow Limited and Magnis Energy 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 Magnis Energy Technologies are associated (or correlated) with RedFlow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RedFlow Limited has no effect on the direction of Magnis Energy i.e., Magnis Energy and RedFlow go up and down completely randomly.
Pair Corralation between Magnis Energy and RedFlow
Assuming the 90 days horizon Magnis Energy is expected to generate 3.78 times less return on investment than RedFlow. But when comparing it to its historical volatility, Magnis Energy Technologies is 3.22 times less risky than RedFlow. It trades about 0.07 of its potential returns per unit of risk. RedFlow Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 13.00 in RedFlow Limited on September 1, 2024 and sell it today you would lose (12.00) from holding RedFlow Limited or give up 92.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Magnis Energy Technologies vs. RedFlow Limited
Performance |
| Timeline |
| Magnis Energy Techno |
| RedFlow Limited |
Magnis Energy and RedFlow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magnis Energy and RedFlow
The main advantage of trading using opposite Magnis Energy and RedFlow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnis Energy position performs unexpectedly, RedFlow 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 RedFlow will offset losses from the drop in RedFlow's long position.| Magnis Energy vs. AFC Energy plc | Magnis Energy vs. Loop Energy | Magnis Energy vs. Sunrise New Energy | Magnis Energy vs. Energizer Holdings |
| RedFlow vs. AFC Energy plc | RedFlow vs. Loop Energy | RedFlow vs. Sunrise New Energy | RedFlow vs. Energizer Holdings |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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