Correlation Between Medibank Private and Xref
Can any of the company-specific risk be diversified away by investing in both Medibank Private and Xref 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 Xref into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medibank Private and Xref, you can compare the effects of market volatilities on Medibank Private and Xref 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 Xref. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medibank Private and Xref.
Diversification Opportunities for Medibank Private and Xref
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Medibank and Xref is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Medibank Private and Xref in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xref 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 Xref. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xref has no effect on the direction of Medibank Private i.e., Medibank Private and Xref go up and down completely randomly.
Pair Corralation between Medibank Private and Xref
Assuming the 90 days trading horizon Medibank Private is expected to generate 2.93 times less return on investment than Xref. But when comparing it to its historical volatility, Medibank Private is 4.74 times less risky than Xref. It trades about 0.05 of its potential returns per unit of risk. Xref is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Xref on September 12, 2024 and sell it today you would earn a total of 1.00 from holding Xref or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.6% |
| Values | Daily Returns |
Medibank Private vs. Xref
Performance |
| Timeline |
| Medibank Private |
| Xref |
Medibank Private and Xref Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medibank Private and Xref
The main advantage of trading using opposite Medibank Private and Xref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medibank Private position performs unexpectedly, Xref 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 Xref will offset losses from the drop in Xref's long position.| Medibank Private vs. Aneka Tambang Tbk | Medibank Private vs. Commonwealth Bank | Medibank Private vs. BHP Group Limited | Medibank Private vs. Rio Tinto |
| Xref vs. Magellan Financial Group | Xref vs. Pinnacle Investment Management | Xref vs. Garda Diversified Ppty | Xref vs. Medibank Private |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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