Correlation Between Magellan Aerospace and Partners Value

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

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

Diversification Opportunities for Magellan Aerospace and Partners Value

0.12

Correlation Coefficient

Magellan Aerospace  Partners Value

Average diversification

The 3 months correlation between Magellan and Partners is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Magellan Aerospace and Partners Value Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Partners Value Inves and Magellan Aerospace 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 Magellan Aerospace are associated (or correlated) with Partners Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Partners Value Inves has no effect on the direction of Magellan Aerospace i.e., Magellan Aerospace and Partners Value go up and down completely randomly.

Pair Corralation between Magellan Aerospace and Partners Value

Assuming the 90 days trading horizon Magellan Aerospace is expected to generate 1.59 times more return on investment than Partners Value. However, Magellan Aerospace is 1.59 times more volatile than Partners Value Investments. It trades about -0.08 of its potential returns per unit of risk. Partners Value Investments is currently generating about -0.24 per unit of risk. If you would invest  1,082  in Magellan Aerospace on October 9, 2024 and sell it today you would lose (42.00) from holding Magellan Aerospace or give up 3.88% of portfolio value over 90 days.

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

Magellan Aerospace  vs.  Partners Value Investments

Magellan Aerospace

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Magellan Aerospace are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating essential indicators, Magellan Aerospace may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Partners Value Inves

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Partners Value Investments are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Partners Value sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Magellan Aerospace and Partners Value

The main advantage of trading using opposite Magellan Aerospace and Partners Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magellan Aerospace position performs unexpectedly, Partners Value 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 Partners Value will offset losses from the drop in Partners Value's long position.

The idea behind Magellan Aerospace and Partners Value Investments 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.