Correlation Between WiseTech Global and Magellan Financial
Can any of the company-specific risk be diversified away by investing in both WiseTech Global and Magellan Financial 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 WiseTech Global and Magellan Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WiseTech Global Limited and Magellan Financial Group, you can compare the effects of market volatilities on WiseTech Global and Magellan Financial 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 WiseTech Global with a short position of Magellan Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of WiseTech Global and Magellan Financial.
Diversification Opportunities for WiseTech Global and Magellan Financial
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WiseTech and Magellan is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding WiseTech Global Limited and Magellan Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magellan Financial and WiseTech Global 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 WiseTech Global Limited are associated (or correlated) with Magellan Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magellan Financial has no effect on the direction of WiseTech Global i.e., WiseTech Global and Magellan Financial go up and down completely randomly.
Pair Corralation between WiseTech Global and Magellan Financial
Assuming the 90 days trading horizon WiseTech Global Limited is expected to under-perform the Magellan Financial. In addition to that, WiseTech Global is 1.11 times more volatile than Magellan Financial Group. It trades about -0.1 of its total potential returns per unit of risk. Magellan Financial Group is currently generating about 0.08 per unit of volatility. If you would invest 1,062 in Magellan Financial Group on September 13, 2024 and sell it today you would earn a total of 46.00 from holding Magellan Financial Group or generate 4.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WiseTech Global Limited vs. Magellan Financial Group
Performance |
| Timeline |
| WiseTech Global |
| Magellan Financial |
WiseTech Global and Magellan Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WiseTech Global and Magellan Financial
The main advantage of trading using opposite WiseTech Global and Magellan Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WiseTech Global position performs unexpectedly, Magellan Financial 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 Financial will offset losses from the drop in Magellan Financial's long position.| WiseTech Global vs. Energy Technologies Limited | WiseTech Global vs. Advanced Braking Technology | WiseTech Global vs. Genetic Technologies | WiseTech Global vs. EP Financial Group |
| Magellan Financial vs. Energy Technologies Limited | Magellan Financial vs. WiseTech Global Limited | Magellan Financial vs. Environmental Clean Technologies | Magellan Financial vs. EROAD |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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