Correlation Between Magellan Financial and COAST ENTERTAINMENT
Can any of the company-specific risk be diversified away by investing in both Magellan Financial and COAST ENTERTAINMENT 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 COAST ENTERTAINMENT 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 COAST ENTERTAINMENT HOLDINGS, you can compare the effects of market volatilities on Magellan Financial and COAST ENTERTAINMENT 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 COAST ENTERTAINMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magellan Financial and COAST ENTERTAINMENT.
Diversification Opportunities for Magellan Financial and COAST ENTERTAINMENT
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Magellan and COAST is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Magellan Financial Group and COAST ENTERTAINMENT HOLDINGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COAST ENTERTAINMENT 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 COAST ENTERTAINMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COAST ENTERTAINMENT has no effect on the direction of Magellan Financial i.e., Magellan Financial and COAST ENTERTAINMENT go up and down completely randomly.
Pair Corralation between Magellan Financial and COAST ENTERTAINMENT
Assuming the 90 days trading horizon Magellan Financial Group is expected to generate 0.91 times more return on investment than COAST ENTERTAINMENT. However, Magellan Financial Group is 1.1 times less risky than COAST ENTERTAINMENT. It trades about 0.21 of its potential returns per unit of risk. COAST ENTERTAINMENT HOLDINGS is currently generating about 0.09 per unit of risk. If you would invest 1,034 in Magellan Financial Group on September 6, 2024 and sell it today you would earn a total of 108.00 from holding Magellan Financial Group or generate 10.44% 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. COAST ENTERTAINMENT HOLDINGS
Performance |
Timeline |
Magellan Financial |
COAST ENTERTAINMENT |
Magellan Financial and COAST ENTERTAINMENT Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Magellan Financial and COAST ENTERTAINMENT
The main advantage of trading using opposite Magellan Financial and COAST ENTERTAINMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magellan Financial position performs unexpectedly, COAST ENTERTAINMENT 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 COAST ENTERTAINMENT will offset losses from the drop in COAST ENTERTAINMENT's long position.Magellan Financial vs. Westpac Banking | Magellan Financial vs. Ecofibre | Magellan Financial vs. Adriatic Metals Plc | Magellan Financial vs. Australian Dairy Farms |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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