Correlation Between Magnora ASA and EJF Investments
Can any of the company-specific risk be diversified away by investing in both Magnora ASA and EJF Investments 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 EJF Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magnora ASA and EJF Investments, you can compare the effects of market volatilities on Magnora ASA and EJF Investments 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 EJF Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnora ASA and EJF Investments.
Diversification Opportunities for Magnora ASA and EJF Investments
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Magnora and EJF is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Magnora ASA and EJF Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EJF Investments 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 EJF Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EJF Investments has no effect on the direction of Magnora ASA i.e., Magnora ASA and EJF Investments go up and down completely randomly.
Pair Corralation between Magnora ASA and EJF Investments
Assuming the 90 days trading horizon Magnora ASA is expected to generate 4.02 times more return on investment than EJF Investments. However, Magnora ASA is 4.02 times more volatile than EJF Investments. It trades about 0.04 of its potential returns per unit of risk. EJF Investments is currently generating about 0.07 per unit of risk. If you would invest 2,394 in Magnora ASA on November 3, 2024 and sell it today you would earn a total of 261.00 from holding Magnora ASA or generate 10.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Magnora ASA vs. EJF Investments
Performance |
| Timeline |
| Magnora ASA |
| EJF Investments |
Magnora ASA and EJF Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magnora ASA and EJF Investments
The main advantage of trading using opposite Magnora ASA and EJF Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnora ASA position performs unexpectedly, EJF Investments 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 EJF Investments will offset losses from the drop in EJF Investments' 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 |
| EJF Investments vs. Eastinco Mining Exploration | EJF Investments vs. Fulcrum Metals PLC | EJF Investments vs. Cornish Metals | EJF Investments vs. Wheaton Precious Metals |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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