Correlation Between Sparx Technology and Magellan Aerospace

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

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

Diversification Opportunities for Sparx Technology and Magellan Aerospace

-0.3

Correlation Coefficient

Sparx Technology  Magellan Aerospace

Very good diversification

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

Pair Corralation between Sparx Technology and Magellan Aerospace

Assuming the 90 days trading horizon Sparx Technology is expected to under-perform the Magellan Aerospace. In addition to that, Sparx Technology is 1.29 times more volatile than Magellan Aerospace. It trades about -0.1 of its total potential returns per unit of risk. Magellan Aerospace is currently generating about 0.18 per unit of volatility. If you would invest  926.00  in Magellan Aerospace on December 22, 2024 and sell it today you would earn a total of  298.00  from holding Magellan Aerospace or generate 32.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Sparx Technology  vs.  Magellan Aerospace

Sparx Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sparx Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Magellan Aerospace

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Magellan Aerospace are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating essential indicators, Magellan Aerospace displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sparx Technology and Magellan Aerospace

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

The idea behind Sparx Technology and Magellan Aerospace 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.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.