Correlation Between BE Semiconductor and Magna International
Can any of the company-specific risk be diversified away by investing in both BE Semiconductor 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 BE Semiconductor and Magna International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BE Semiconductor Industries and Magna International, you can compare the effects of market volatilities on BE Semiconductor 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 BE Semiconductor with a short position of Magna International. Check out your portfolio center. Please also check ongoing floating volatility patterns of BE Semiconductor and Magna International.
Diversification Opportunities for BE Semiconductor and Magna International
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between BSI and Magna is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding BE Semiconductor Industries and Magna International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna International and BE Semiconductor 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 BE Semiconductor Industries 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 BE Semiconductor i.e., BE Semiconductor and Magna International go up and down completely randomly.
Pair Corralation between BE Semiconductor and Magna International
Assuming the 90 days trading horizon BE Semiconductor is expected to generate 1.18 times less return on investment than Magna International. But when comparing it to its historical volatility, BE Semiconductor Industries is 1.0 times less risky than Magna International. It trades about 0.21 of its potential returns per unit of risk. Magna International is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 3,812 in Magna International on September 4, 2024 and sell it today you would earn a total of 517.00 from holding Magna International or generate 13.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BE Semiconductor Industries vs. Magna International
Performance |
| Timeline |
| BE Semiconductor Ind |
| Magna International |
BE Semiconductor and Magna International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BE Semiconductor and Magna International
The main advantage of trading using opposite BE Semiconductor and Magna International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BE Semiconductor 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.| BE Semiconductor vs. Apple Inc | BE Semiconductor vs. Apple Inc | BE Semiconductor vs. Apple Inc | BE Semiconductor vs. Apple Inc |
| Magna International vs. Dno ASA | Magna International vs. PT Astra International | Magna International vs. Superior Plus Corp | Magna International vs. NMI Holdings |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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