Correlation Between IShares Preferred and Magellan Midstream
Can any of the company-specific risk be diversified away by investing in both IShares Preferred and Magellan Midstream 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 IShares Preferred and Magellan Midstream into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Preferred and and Magellan Midstream Partners, you can compare the effects of market volatilities on IShares Preferred and Magellan Midstream 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 IShares Preferred with a short position of Magellan Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Preferred and Magellan Midstream.
Diversification Opportunities for IShares Preferred and Magellan Midstream
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and Magellan is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding iShares Preferred and and Magellan Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magellan Midstream and IShares Preferred 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 iShares Preferred and are associated (or correlated) with Magellan Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magellan Midstream has no effect on the direction of IShares Preferred i.e., IShares Preferred and Magellan Midstream go up and down completely randomly.
Pair Corralation between IShares Preferred and Magellan Midstream
Considering the 90-day investment horizon IShares Preferred is expected to generate 5.98 times less return on investment than Magellan Midstream. But when comparing it to its historical volatility, iShares Preferred and is 2.14 times less risky than Magellan Midstream. It trades about 0.05 of its potential returns per unit of risk. Magellan Midstream Partners is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 4,854 in Magellan Midstream Partners on September 3, 2024 and sell it today you would earn a total of 1,697 from holding Magellan Midstream Partners or generate 34.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 30.91% |
| Values | Daily Returns |
iShares Preferred and vs. Magellan Midstream Partners
Performance |
| Timeline |
| iShares Preferred |
| Magellan Midstream |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
IShares Preferred and Magellan Midstream Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Preferred and Magellan Midstream
The main advantage of trading using opposite IShares Preferred and Magellan Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Preferred position performs unexpectedly, Magellan Midstream 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 Magellan Midstream will offset losses from the drop in Magellan Midstream's long position.| IShares Preferred vs. Invesco Preferred ETF | IShares Preferred vs. iShares iBoxx High | IShares Preferred vs. Invesco Financial Preferred | IShares Preferred vs. SPDR Bloomberg High |
| Magellan Midstream vs. Kinder Morgan | Magellan Midstream vs. Enterprise Products Partners | Magellan Midstream vs. Williams Companies | Magellan Midstream vs. MPLX LP |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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