Correlation Between DENSO CORP and Magna International
Can any of the company-specific risk be diversified away by investing in both DENSO CORP 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 DENSO CORP and Magna International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DENSO P ADR and Magna International, you can compare the effects of market volatilities on DENSO CORP 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 DENSO CORP with a short position of Magna International. Check out your portfolio center. Please also check ongoing floating volatility patterns of DENSO CORP and Magna International.
Diversification Opportunities for DENSO CORP and Magna International
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DENSO and Magna is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding DENSO P ADR and Magna International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna International and DENSO CORP 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 DENSO P ADR 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 DENSO CORP i.e., DENSO CORP and Magna International go up and down completely randomly.
Pair Corralation between DENSO CORP and Magna International
Assuming the 90 days trading horizon DENSO P ADR is expected to generate 1.38 times more return on investment than Magna International. However, DENSO CORP is 1.38 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 -0.31 per unit of risk. If you would invest 1,310 in DENSO P ADR on October 11, 2024 and sell it today you would earn a total of 0.00 from holding DENSO P ADR or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DENSO P ADR vs. Magna International
Performance |
| Timeline |
| DENSO P ADR |
| Magna International |
DENSO CORP and Magna International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DENSO CORP and Magna International
The main advantage of trading using opposite DENSO CORP and Magna International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DENSO CORP 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.| DENSO CORP vs. ETFS Coffee ETC | DENSO CORP vs. X FAB Silicon Foundries | DENSO CORP vs. FANDIFI TECHNOLOGY P | DENSO CORP vs. MCEWEN MINING INC |
| Magna International vs. T MOBILE US | Magna International vs. AOYAMA TRADING | Magna International vs. FIH MOBILE | Magna International vs. Highlight Communications AG |
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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