Correlation Between Magellan Financial and ApplyDirect
Can any of the company-specific risk be diversified away by investing in both Magellan Financial and ApplyDirect 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 Financial and ApplyDirect into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magellan Financial Group and ApplyDirect, you can compare the effects of market volatilities on Magellan Financial and ApplyDirect 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 Financial with a short position of ApplyDirect. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magellan Financial and ApplyDirect.
Diversification Opportunities for Magellan Financial and ApplyDirect
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Magellan and ApplyDirect is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Magellan Financial Group and ApplyDirect in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ApplyDirect and Magellan Financial 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 Financial Group are associated (or correlated) with ApplyDirect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ApplyDirect has no effect on the direction of Magellan Financial i.e., Magellan Financial and ApplyDirect go up and down completely randomly.
Pair Corralation between Magellan Financial and ApplyDirect
Assuming the 90 days trading horizon Magellan Financial is expected to generate 3.17 times less return on investment than ApplyDirect. But when comparing it to its historical volatility, Magellan Financial Group is 3.85 times less risky than ApplyDirect. It trades about 0.04 of its potential returns per unit of risk. ApplyDirect is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 10.00 in ApplyDirect on October 4, 2024 and sell it today you would lose (4.90) from holding ApplyDirect or give up 49.0% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Magellan Financial Group vs. ApplyDirect
Performance |
Timeline |
Magellan Financial |
ApplyDirect |
Magellan Financial and ApplyDirect Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Magellan Financial and ApplyDirect
The main advantage of trading using opposite Magellan Financial and ApplyDirect positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magellan Financial position performs unexpectedly, ApplyDirect 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 ApplyDirect will offset losses from the drop in ApplyDirect's long position.Magellan Financial vs. Austco Healthcare | Magellan Financial vs. Health and Plant | Magellan Financial vs. Ainsworth Game Technology | Magellan Financial vs. Hotel Property Investments |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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