Correlation Between Sempra and MAGNUM MINING
Can any of the company-specific risk be diversified away by investing in both Sempra and MAGNUM MINING 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 Sempra and MAGNUM MINING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sempra and MAGNUM MINING EXP, you can compare the effects of market volatilities on Sempra and MAGNUM MINING 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 Sempra with a short position of MAGNUM MINING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sempra and MAGNUM MINING.
Diversification Opportunities for Sempra and MAGNUM MINING
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sempra and MAGNUM is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Sempra and MAGNUM MINING EXP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAGNUM MINING EXP and Sempra 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 Sempra are associated (or correlated) with MAGNUM MINING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAGNUM MINING EXP has no effect on the direction of Sempra i.e., Sempra and MAGNUM MINING go up and down completely randomly.
Pair Corralation between Sempra and MAGNUM MINING
Assuming the 90 days horizon Sempra is expected to generate 0.51 times more return on investment than MAGNUM MINING. However, Sempra is 1.97 times less risky than MAGNUM MINING. It trades about -0.06 of its potential returns per unit of risk. MAGNUM MINING EXP is currently generating about -0.13 per unit of risk. If you would invest 8,640 in Sempra on November 18, 2024 and sell it today you would lose (580.00) from holding Sempra or give up 6.71% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 98.36% |
Values | Daily Returns |
Sempra vs. MAGNUM MINING EXP
Performance |
Timeline |
Sempra |
MAGNUM MINING EXP |
Sempra and MAGNUM MINING Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sempra and MAGNUM MINING
The main advantage of trading using opposite Sempra and MAGNUM MINING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sempra position performs unexpectedly, MAGNUM MINING 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 MAGNUM MINING will offset losses from the drop in MAGNUM MINING's long position.Sempra vs. Scandinavian Tobacco Group | ||
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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