Correlation Between Magnora ASA and GlobalData PLC
Can any of the company-specific risk be diversified away by investing in both Magnora ASA and GlobalData 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 GlobalData 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 GlobalData PLC, you can compare the effects of market volatilities on Magnora ASA and GlobalData 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 GlobalData PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnora ASA and GlobalData PLC.
Diversification Opportunities for Magnora ASA and GlobalData PLC
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Magnora and GlobalData is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Magnora ASA and GlobalData PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GlobalData 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 GlobalData PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GlobalData PLC has no effect on the direction of Magnora ASA i.e., Magnora ASA and GlobalData PLC go up and down completely randomly.
Pair Corralation between Magnora ASA and GlobalData PLC
Assuming the 90 days trading horizon Magnora ASA is expected to generate 1.7 times less return on investment than GlobalData PLC. In addition to that, Magnora ASA is 1.27 times more volatile than GlobalData PLC. It trades about 0.1 of its total potential returns per unit of risk. GlobalData PLC is currently generating about 0.21 per unit of volatility. If you would invest 18,900 in GlobalData PLC on August 25, 2024 and sell it today you would earn a total of 1,700 from holding GlobalData PLC or generate 8.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Magnora ASA vs. GlobalData PLC
Performance |
| Timeline |
| Magnora ASA |
| GlobalData PLC |
Magnora ASA and GlobalData PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magnora ASA and GlobalData PLC
The main advantage of trading using opposite Magnora ASA and GlobalData PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnora ASA position performs unexpectedly, GlobalData 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 GlobalData PLC will offset losses from the drop in GlobalData PLC's long position.| Magnora ASA vs. Samsung Electronics Co | Magnora ASA vs. Samsung Electronics Co | Magnora ASA vs. Hyundai Motor | Magnora ASA vs. Toyota Motor Corp |
| GlobalData PLC vs. Catalyst Media Group | GlobalData PLC vs. CATLIN GROUP | GlobalData PLC vs. Tamburi Investment Partners | GlobalData PLC vs. Magnora ASA |
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 Correlations module to find global opportunities by holding instruments from different markets.
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