Correlation Between Magellan Financial and Insignia Financial

Can any of the company-specific risk be diversified away by investing in both Magellan Financial and Insignia 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 Magellan Financial and Insignia Financial 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 Insignia Financial, you can compare the effects of market volatilities on Magellan Financial and Insignia 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 Magellan Financial with a short position of Insignia Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magellan Financial and Insignia Financial.

Diversification Opportunities for Magellan Financial and Insignia Financial

-0.3

Correlation Coefficient

Magellan Financial  Insignia Financial

Very good diversification

The 3 months correlation between Magellan and Insignia is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Magellan Financial Group and Insignia Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insignia Financial 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 Insignia Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insignia Financial has no effect on the direction of Magellan Financial i.e., Magellan Financial and Insignia Financial go up and down completely randomly.

Pair Corralation between Magellan Financial and Insignia Financial

Assuming the 90 days trading horizon Magellan Financial Group is expected to under-perform the Insignia Financial. But the stock apears to be less risky and, when comparing its historical volatility, Magellan Financial Group is 1.03 times less risky than Insignia Financial. The stock trades about -0.16 of its potential returns per unit of risk. The Insignia Financial is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  359.00  in Insignia Financial on December 30, 2024 and sell it today you would earn a total of  73.00  from holding Insignia Financial or generate 20.33% return on investment over 90 days.

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

Magellan Financial Group  vs.  Insignia Financial

Magellan Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Magellan Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Insignia Financial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Insignia Financial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Insignia Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Magellan Financial and Insignia Financial

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

The idea behind Magellan Financial Group and Insignia Financial 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..