Correlation Between Magnora ASA and Rheinmetall
Can any of the company-specific risk be diversified away by investing in both Magnora ASA and Rheinmetall 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 Magnora ASA and Rheinmetall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magnora ASA and Rheinmetall AG, you can compare the effects of market volatilities on Magnora ASA and Rheinmetall 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 Magnora ASA with a short position of Rheinmetall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnora ASA and Rheinmetall.
Diversification Opportunities for Magnora ASA and Rheinmetall
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Magnora and Rheinmetall is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Magnora ASA and Rheinmetall AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rheinmetall AG and Magnora ASA 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 Magnora ASA are associated (or correlated) with Rheinmetall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rheinmetall AG has no effect on the direction of Magnora ASA i.e., Magnora ASA and Rheinmetall go up and down completely randomly.
Pair Corralation between Magnora ASA and Rheinmetall
Assuming the 90 days trading horizon Magnora ASA is expected to generate 1.59 times less return on investment than Rheinmetall. In addition to that, Magnora ASA is 2.8 times more volatile than Rheinmetall AG. It trades about 0.04 of its total potential returns per unit of risk. Rheinmetall AG is currently generating about 0.17 per unit of volatility. If you would invest 32,762 in Rheinmetall AG on November 4, 2024 and sell it today you would earn a total of 42,748 from holding Rheinmetall AG or generate 130.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magnora ASA vs. Rheinmetall AG
Performance |
| Timeline |
| Magnora ASA |
| Rheinmetall AG |
Magnora ASA and Rheinmetall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magnora ASA and Rheinmetall
The main advantage of trading using opposite Magnora ASA and Rheinmetall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnora ASA position performs unexpectedly, Rheinmetall 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 Rheinmetall will offset losses from the drop in Rheinmetall's long position.| Magnora ASA vs. Take Two Interactive Software | Magnora ASA vs. Aeorema Communications Plc | Magnora ASA vs. Dairy Farm International | Magnora ASA vs. MoneysupermarketCom Group PLC |
| Rheinmetall vs. Samsung Electronics Co | Rheinmetall vs. Samsung Electronics Co | Rheinmetall vs. Toyota Motor Corp | Rheinmetall vs. Reliance Industries Ltd |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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