Correlation Between Autoliv and Magna International
Can any of the company-specific risk be diversified away by investing in both Autoliv 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 Autoliv and Magna International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autoliv and Magna International, you can compare the effects of market volatilities on Autoliv 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 Autoliv with a short position of Magna International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autoliv and Magna International.
Diversification Opportunities for Autoliv and Magna International
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Autoliv and Magna is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Autoliv and Magna International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna International and Autoliv 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 Autoliv 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 Autoliv i.e., Autoliv and Magna International go up and down completely randomly.
Pair Corralation between Autoliv and Magna International
Considering the 90-day investment horizon Autoliv is expected to generate 0.81 times more return on investment than Magna International. However, Autoliv is 1.23 times less risky than Magna International. It trades about 0.29 of its potential returns per unit of risk. Magna International is currently generating about -0.22 per unit of risk. If you would invest 9,369 in Autoliv on October 25, 2024 and sell it today you would earn a total of 580.00 from holding Autoliv or generate 6.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Autoliv vs. Magna International
Performance |
| Timeline |
| Autoliv |
| Magna International |
Autoliv and Magna International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autoliv and Magna International
The main advantage of trading using opposite Autoliv and Magna International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autoliv 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.The idea behind Autoliv and Magna International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Magna International vs. Gentex | Magna International vs. Autoliv | Magna International vs. Fox Factory Holding | Magna International vs. Dana Inc |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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