Correlation Between Corporate Travel and Magna International
Can any of the company-specific risk be diversified away by investing in both Corporate Travel and Magna International 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 Corporate Travel and Magna International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Corporate Travel Management and Magna International, you can compare the effects of market volatilities on Corporate Travel and Magna International 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 Corporate Travel with a short position of Magna International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Travel and Magna International.
Diversification Opportunities for Corporate Travel and Magna International
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Corporate and Magna is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Travel Management and Magna International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna International and Corporate Travel 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 Corporate Travel Management are associated (or correlated) with Magna International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magna International has no effect on the direction of Corporate Travel i.e., Corporate Travel and Magna International go up and down completely randomly.
Pair Corralation between Corporate Travel and Magna International
Assuming the 90 days trading horizon Corporate Travel Management is expected to generate 1.33 times more return on investment than Magna International. However, Corporate Travel is 1.33 times more volatile than Magna International. It trades about 0.01 of its potential returns per unit of risk. Magna International is currently generating about -0.01 per unit of risk. If you would invest 1,068 in Corporate Travel Management on November 28, 2024 and sell it today you would lose (48.00) from holding Corporate Travel Management or give up 4.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Corporate Travel Management vs. Magna International
Performance |
| Timeline |
| Corporate Travel Man |
| Magna International |
Corporate Travel and Magna International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Corporate Travel and Magna International
The main advantage of trading using opposite Corporate Travel and Magna International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporate Travel position performs unexpectedly, Magna International 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 Magna International will offset losses from the drop in Magna International's long position.| Corporate Travel vs. CONAGRA FOODS | Corporate Travel vs. GWILLI FOOD | Corporate Travel vs. China Railway Construction | Corporate Travel vs. DAIRY FARM INTL |
| Magna International vs. Thai Beverage Public | Magna International vs. Moneysupermarket Group PLC | Magna International vs. PATTIES FOODS | Magna International vs. Dairy Farm International |
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 Stocks Directory module to find actively traded stocks across global markets.
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