Correlation Between Magnora ASA and Bunzl PLC
Can any of the company-specific risk be diversified away by investing in both Magnora ASA and Bunzl PLC 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 Bunzl PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magnora ASA and Bunzl PLC, you can compare the effects of market volatilities on Magnora ASA and Bunzl PLC 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 Bunzl PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnora ASA and Bunzl PLC.
Diversification Opportunities for Magnora ASA and Bunzl PLC
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Magnora and Bunzl is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Magnora ASA and Bunzl PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bunzl PLC 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 Bunzl PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bunzl PLC has no effect on the direction of Magnora ASA i.e., Magnora ASA and Bunzl PLC go up and down completely randomly.
Pair Corralation between Magnora ASA and Bunzl PLC
Assuming the 90 days trading horizon Magnora ASA is expected to generate 5.17 times more return on investment than Bunzl PLC. However, Magnora ASA is 5.17 times more volatile than Bunzl PLC. It trades about 0.02 of its potential returns per unit of risk. Bunzl PLC is currently generating about 0.09 per unit of risk. If you would invest 2,628 in Magnora ASA on September 12, 2024 and sell it today you would lose (193.00) from holding Magnora ASA or give up 7.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
Magnora ASA vs. Bunzl PLC
Performance |
| Timeline |
| Magnora ASA |
| Bunzl PLC |
Magnora ASA and Bunzl PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magnora ASA and Bunzl PLC
The main advantage of trading using opposite Magnora ASA and Bunzl PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnora ASA position performs unexpectedly, Bunzl PLC 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 Bunzl PLC will offset losses from the drop in Bunzl PLC's long position.| Magnora ASA vs. Hong Kong Land | Magnora ASA vs. Neometals | Magnora ASA vs. Coor Service Management | Magnora ASA vs. Fidelity Sustainable USD |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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