Correlation Between Magellan Financial and Microequities Asset

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

Diversification Opportunities for Magellan Financial and Microequities Asset

0.19

Correlation Coefficient

Magellan Financial  Microequities Asset

Average diversification

The 3 months correlation between Magellan and Microequities is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Magellan Financial Group and Microequities Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microequities Asset 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 Microequities Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microequities Asset has no effect on the direction of Magellan Financial i.e., Magellan Financial and Microequities Asset go up and down completely randomly.

Pair Corralation between Magellan Financial and Microequities Asset

Assuming the 90 days trading horizon Magellan Financial Group is expected to under-perform the Microequities Asset. In addition to that, Magellan Financial is 1.08 times more volatile than Microequities Asset Management. It trades about -0.16 of its total potential returns per unit of risk. Microequities Asset Management is currently generating about 0.01 per unit of volatility. If you would invest  50.00  in Microequities Asset Management on December 30, 2024 and sell it today you would earn a total of  0.00  from holding Microequities Asset Management or generate 0.0% return on investment over 90 days.

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

Magellan Financial Group  vs.  Microequities Asset Management

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.

Microequities Asset

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Microequities Asset Management are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, Microequities Asset is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Magellan Financial and Microequities Asset

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

The idea behind Magellan Financial Group and Microequities Asset Management 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.