Correlation Between Garrett Motion and Magna International
Can any of the company-specific risk be diversified away by investing in both Garrett Motion 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 Garrett Motion and Magna International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Garrett Motion and Magna International, you can compare the effects of market volatilities on Garrett Motion 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 Garrett Motion with a short position of Magna International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garrett Motion and Magna International.
Diversification Opportunities for Garrett Motion and Magna International
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Garrett and Magna is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Garrett Motion and Magna International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna International and Garrett Motion 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 Garrett Motion 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 Garrett Motion i.e., Garrett Motion and Magna International go up and down completely randomly.
Pair Corralation between Garrett Motion and Magna International
Considering the 90-day investment horizon Garrett Motion is expected to under-perform the Magna International. But the stock apears to be less risky and, when comparing its historical volatility, Garrett Motion is 1.14 times less risky than Magna International. The stock trades about 0.0 of its potential returns per unit of risk. The Magna International is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4,210 in Magna International on August 23, 2024 and sell it today you would earn a total of 204.00 from holding Magna International or generate 4.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Garrett Motion vs. Magna International
Performance |
| Timeline |
| Garrett Motion |
| Magna International |
Garrett Motion and Magna International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Garrett Motion and Magna International
The main advantage of trading using opposite Garrett Motion and Magna International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Garrett Motion 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.| Garrett Motion vs. Gentex | Garrett Motion vs. Adient PLC | Garrett Motion vs. Autoliv | Garrett Motion vs. Fox Factory Holding |
| 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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