Correlation Between Magnora ASA and Herald Investment
Can any of the company-specific risk be diversified away by investing in both Magnora ASA and Herald Investment 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 Herald Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magnora ASA and Herald Investment Trust, you can compare the effects of market volatilities on Magnora ASA and Herald Investment 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 Herald Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnora ASA and Herald Investment.
Diversification Opportunities for Magnora ASA and Herald Investment
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Magnora and Herald is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Magnora ASA and Herald Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herald Investment Trust 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 Herald Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herald Investment Trust has no effect on the direction of Magnora ASA i.e., Magnora ASA and Herald Investment go up and down completely randomly.
Pair Corralation between Magnora ASA and Herald Investment
Assuming the 90 days trading horizon Magnora ASA is expected to generate 4.43 times more return on investment than Herald Investment. However, Magnora ASA is 4.43 times more volatile than Herald Investment Trust. It trades about 0.04 of its potential returns per unit of risk. Herald Investment Trust is currently generating about 0.07 per unit of risk. If you would invest 1,787 in Magnora ASA on September 14, 2024 and sell it today you would earn a total of 718.00 from holding Magnora ASA or generate 40.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.59% |
| Values | Daily Returns |
Magnora ASA vs. Herald Investment Trust
Performance |
| Timeline |
| Magnora ASA |
| Herald Investment Trust |
Magnora ASA and Herald Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magnora ASA and Herald Investment
The main advantage of trading using opposite Magnora ASA and Herald Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnora ASA position performs unexpectedly, Herald Investment 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 Herald Investment will offset losses from the drop in Herald Investment's long position.| Magnora ASA vs. Aurora Investment Trust | Magnora ASA vs. Fevertree Drinks Plc | Magnora ASA vs. Monster Beverage Corp | Magnora ASA vs. Hansa Investment |
| Herald Investment vs. Catalyst Media Group | Herald Investment vs. CATLIN GROUP | Herald Investment vs. Tamburi Investment Partners | Herald Investment 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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