Correlation Between Medibank Private and TPG Telecom
Can any of the company-specific risk be diversified away by investing in both Medibank Private and TPG Telecom 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 TPG Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medibank Private and TPG Telecom, you can compare the effects of market volatilities on Medibank Private and TPG Telecom 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 TPG Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medibank Private and TPG Telecom.
Diversification Opportunities for Medibank Private and TPG Telecom
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Medibank and TPG is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Medibank Private and TPG Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPG Telecom 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 TPG Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPG Telecom has no effect on the direction of Medibank Private i.e., Medibank Private and TPG Telecom go up and down completely randomly.
Pair Corralation between Medibank Private and TPG Telecom
Assuming the 90 days trading horizon Medibank Private is expected to generate 0.83 times more return on investment than TPG Telecom. However, Medibank Private is 1.2 times less risky than TPG Telecom. It trades about 0.04 of its potential returns per unit of risk. TPG Telecom is currently generating about 0.0 per unit of risk. If you would invest 337.00 in Medibank Private on September 15, 2024 and sell it today you would earn a total of 37.00 from holding Medibank Private or generate 10.98% 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. TPG Telecom
Performance |
| Timeline |
| Medibank Private |
| TPG Telecom |
Medibank Private and TPG Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medibank Private and TPG Telecom
The main advantage of trading using opposite Medibank Private and TPG Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medibank Private position performs unexpectedly, TPG Telecom 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 TPG Telecom will offset losses from the drop in TPG Telecom's long position.| Medibank Private vs. TPG Telecom | Medibank Private vs. Magellan Financial Group | Medibank Private vs. Macquarie Bank Limited | Medibank Private vs. Perpetual Credit Income |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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