Correlation Between Western Investment and Magellan Aerospace
Can any of the company-specific risk be diversified away by investing in both Western Investment and Magellan Aerospace 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 Western Investment and Magellan Aerospace into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Investment and Magellan Aerospace, you can compare the effects of market volatilities on Western Investment and Magellan Aerospace 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 Western Investment with a short position of Magellan Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Investment and Magellan Aerospace.
Diversification Opportunities for Western Investment and Magellan Aerospace
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Western and Magellan is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Western Investment and Magellan Aerospace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magellan Aerospace and Western Investment 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 Western Investment are associated (or correlated) with Magellan Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magellan Aerospace has no effect on the direction of Western Investment i.e., Western Investment and Magellan Aerospace go up and down completely randomly.
Pair Corralation between Western Investment and Magellan Aerospace
Given the investment horizon of 90 days Western Investment is expected to generate 4.18 times more return on investment than Magellan Aerospace. However, Western Investment is 4.18 times more volatile than Magellan Aerospace. It trades about 0.11 of its potential returns per unit of risk. Magellan Aerospace is currently generating about 0.0 per unit of risk. If you would invest 42.00 in Western Investment on September 12, 2024 and sell it today you would earn a total of 4.00 from holding Western Investment or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Investment vs. Magellan Aerospace
Performance |
| Timeline |
| Western Investment |
| Magellan Aerospace |
Western Investment and Magellan Aerospace Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Investment and Magellan Aerospace
The main advantage of trading using opposite Western Investment and Magellan Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Investment position performs unexpectedly, Magellan Aerospace 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 Aerospace will offset losses from the drop in Magellan Aerospace's long position.| Western Investment vs. Brompton Lifeco Split | Western Investment vs. North American Financial | Western Investment vs. Prime Dividend Corp | Western Investment vs. Financial 15 Split |
| Magellan Aerospace vs. Quisitive Technology Solutions | Magellan Aerospace vs. Datable Technology Corp | Magellan Aerospace vs. Rubicon Organics | Magellan Aerospace vs. Renoworks Software |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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