Correlation Between Fox Factory and Magna International
Can any of the company-specific risk be diversified away by investing in both Fox Factory 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 Fox Factory and Magna International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fox Factory Holding and Magna International, you can compare the effects of market volatilities on Fox Factory 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 Fox Factory with a short position of Magna International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fox Factory and Magna International.
Diversification Opportunities for Fox Factory and Magna International
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Fox and Magna is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Fox Factory Holding and Magna International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna International and Fox Factory 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 Fox Factory Holding 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 Fox Factory i.e., Fox Factory and Magna International go up and down completely randomly.
Pair Corralation between Fox Factory and Magna International
Given the investment horizon of 90 days Fox Factory Holding is expected to generate 1.43 times more return on investment than Magna International. However, Fox Factory is 1.43 times more volatile than Magna International. It trades about -0.02 of its potential returns per unit of risk. Magna International is currently generating about -0.22 per unit of risk. If you would invest 2,917 in Fox Factory Holding on October 25, 2024 and sell it today you would lose (31.00) from holding Fox Factory Holding or give up 1.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fox Factory Holding vs. Magna International
Performance |
| Timeline |
| Fox Factory Holding |
| Magna International |
Fox Factory and Magna International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fox Factory and Magna International
The main advantage of trading using opposite Fox Factory and Magna International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fox Factory 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.| Fox Factory vs. Dorman Products | Fox Factory vs. Malibu Boats | Fox Factory vs. Installed Building Products | Fox Factory vs. ExlService Holdings |
| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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