Correlation Between Guru Organic and Magellan Aerospace

Can any of the company-specific risk be diversified away by investing in both Guru Organic 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 Guru Organic and Magellan Aerospace into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guru Organic Energy and Magellan Aerospace, you can compare the effects of market volatilities on Guru Organic 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 Guru Organic with a short position of Magellan Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guru Organic and Magellan Aerospace.

Diversification Opportunities for Guru Organic and Magellan Aerospace

-0.73

Correlation Coefficient

Guru Organic  Magellan Aerospace

Pay attention - limited upside

The 3 months correlation between Guru and Magellan is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Guru Organic Energy and Magellan Aerospace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magellan Aerospace and Guru Organic 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 Guru Organic Energy 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 Guru Organic i.e., Guru Organic and Magellan Aerospace go up and down completely randomly.

Pair Corralation between Guru Organic and Magellan Aerospace

Assuming the 90 days trading horizon Guru Organic Energy is expected to under-perform the Magellan Aerospace. In addition to that, Guru Organic is 1.84 times more volatile than Magellan Aerospace. It trades about -0.03 of its total potential returns per unit of risk. Magellan Aerospace is currently generating about 0.16 per unit of volatility. If you would invest  908.00  in Magellan Aerospace on September 3, 2024 and sell it today you would earn a total of  168.00  from holding Magellan Aerospace or generate 18.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Guru Organic Energy  vs.  Magellan Aerospace

Guru Organic Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guru Organic Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Guru Organic is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Magellan Aerospace

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Magellan Aerospace are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating essential indicators, Magellan Aerospace displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guru Organic and Magellan Aerospace

The main advantage of trading using opposite Guru Organic and Magellan Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guru Organic 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.

The idea behind Guru Organic Energy and Magellan Aerospace pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.