Correlation Between First Republic and Magna International
Can any of the company-specific risk be diversified away by investing in both First Republic 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 First Republic and Magna International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Republic Bank and Magna International, you can compare the effects of market volatilities on First Republic 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 First Republic with a short position of Magna International. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Republic and Magna International.
Diversification Opportunities for First Republic and Magna International
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Magna is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding First Republic Bank and Magna International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna International and First Republic 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 First Republic Bank 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 First Republic i.e., First Republic and Magna International go up and down completely randomly.
Pair Corralation between First Republic and Magna International
If you would invest 4,087 in Magna International on August 31, 2024 and sell it today you would earn a total of 408.00 from holding Magna International or generate 9.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.55% |
| Values | Daily Returns |
First Republic Bank vs. Magna International
Performance |
| Timeline |
| First Republic Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Magna International |
First Republic and Magna International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Republic and Magna International
The main advantage of trading using opposite First Republic and Magna International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Republic 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.| First Republic vs. Magna International | First Republic vs. Contagious Gaming | First Republic vs. BorgWarner | First Republic vs. Cars Inc |
| Magna International vs. Allison Transmission Holdings | Magna International vs. Aptiv PLC | Magna International vs. LKQ Corporation | Magna International vs. Lear Corporation |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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