Correlation Between Labrador Iron and Magellan Aerospace
Can any of the company-specific risk be diversified away by investing in both Labrador Iron 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 Labrador Iron and Magellan Aerospace into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Labrador Iron Ore and Magellan Aerospace, you can compare the effects of market volatilities on Labrador Iron 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 Labrador Iron with a short position of Magellan Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Labrador Iron and Magellan Aerospace.
Diversification Opportunities for Labrador Iron and Magellan Aerospace
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Labrador and Magellan is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Labrador Iron Ore and Magellan Aerospace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magellan Aerospace and Labrador Iron 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 Labrador Iron Ore 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 Labrador Iron i.e., Labrador Iron and Magellan Aerospace go up and down completely randomly.
Pair Corralation between Labrador Iron and Magellan Aerospace
Assuming the 90 days trading horizon Labrador Iron Ore is expected to under-perform the Magellan Aerospace. But the stock apears to be less risky and, when comparing its historical volatility, Labrador Iron Ore is 2.0 times less risky than Magellan Aerospace. The stock trades about 0.0 of its potential returns per unit of risk. The Magellan Aerospace is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,257 in Magellan Aerospace on April 22, 2025 and sell it today you would earn a total of 538.00 from holding Magellan Aerospace or generate 42.8% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Labrador Iron Ore vs. Magellan Aerospace
Performance |
Timeline |
Labrador Iron Ore |
Magellan Aerospace |
Labrador Iron and Magellan Aerospace Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Labrador Iron and Magellan Aerospace
The main advantage of trading using opposite Labrador Iron and Magellan Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Labrador Iron 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.Labrador Iron vs. Keyera Corp | Labrador Iron vs. Russel Metals | Labrador Iron vs. Freehold Royalties | Labrador Iron vs. Capital Power |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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