Correlation Between Cooper Stnd and Magna International
Can any of the company-specific risk be diversified away by investing in both Cooper Stnd 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 Cooper Stnd and Magna International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cooper Stnd and Magna International, you can compare the effects of market volatilities on Cooper Stnd 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 Cooper Stnd with a short position of Magna International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cooper Stnd and Magna International.
Diversification Opportunities for Cooper Stnd and Magna International
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cooper and Magna is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Cooper Stnd and Magna International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna International and Cooper Stnd 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 Cooper Stnd 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 Cooper Stnd i.e., Cooper Stnd and Magna International go up and down completely randomly.
Pair Corralation between Cooper Stnd and Magna International
Considering the 90-day investment horizon Cooper Stnd is expected to generate 1.85 times more return on investment than Magna International. However, Cooper Stnd is 1.85 times more volatile than Magna International. It trades about 0.09 of its potential returns per unit of risk. Magna International is currently generating about 0.11 per unit of risk. If you would invest 1,317 in Cooper Stnd on September 12, 2024 and sell it today you would earn a total of 245.00 from holding Cooper Stnd or generate 18.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cooper Stnd vs. Magna International
Performance |
| Timeline |
| Cooper Stnd |
| Magna International |
Cooper Stnd and Magna International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cooper Stnd and Magna International
The main advantage of trading using opposite Cooper Stnd and Magna International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cooper Stnd 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.| Cooper Stnd vs. Dorman Products | Cooper Stnd vs. Monro Muffler Brake | Cooper Stnd vs. Standard Motor Products | Cooper Stnd vs. Stoneridge |
| Magna International vs. Ford Motor | Magna International vs. General Motors | Magna International vs. Goodyear Tire Rubber | Magna International vs. Li Auto |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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