Correlation Between Medibank Private and Emetals
Can any of the company-specific risk be diversified away by investing in both Medibank Private and Emetals 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 Medibank Private and Emetals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medibank Private and Emetals, you can compare the effects of market volatilities on Medibank Private and Emetals 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 Medibank Private with a short position of Emetals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medibank Private and Emetals.
Diversification Opportunities for Medibank Private and Emetals
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Medibank and Emetals is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Medibank Private and Emetals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emetals and Medibank Private 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 Medibank Private are associated (or correlated) with Emetals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emetals has no effect on the direction of Medibank Private i.e., Medibank Private and Emetals go up and down completely randomly.
Pair Corralation between Medibank Private and Emetals
Assuming the 90 days trading horizon Medibank Private is expected to generate 0.23 times more return on investment than Emetals. However, Medibank Private is 4.36 times less risky than Emetals. It trades about 0.3 of its potential returns per unit of risk. Emetals is currently generating about 0.02 per unit of risk. If you would invest 379.00 in Medibank Private on November 3, 2024 and sell it today you would earn a total of 21.00 from holding Medibank Private or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Medibank Private vs. Emetals
Performance |
| Timeline |
| Medibank Private |
| Emetals |
Medibank Private and Emetals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medibank Private and Emetals
The main advantage of trading using opposite Medibank Private and Emetals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medibank Private position performs unexpectedly, Emetals 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 Emetals will offset losses from the drop in Emetals' long position.| Medibank Private vs. Charter Hall Retail | Medibank Private vs. Arc Funds | Medibank Private vs. Lendlease Group | Medibank Private vs. Beam Communications Holdings |
| Emetals vs. Northern Star Resources | Emetals vs. Evolution Mining | Emetals vs. Bluescope Steel | Emetals vs. Sandfire Resources NL |
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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