Correlation Between Knight Therapeutics and Magna International
Can any of the company-specific risk be diversified away by investing in both Knight Therapeutics 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 Knight Therapeutics and Magna International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knight Therapeutics and Magna International, you can compare the effects of market volatilities on Knight Therapeutics 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 Knight Therapeutics with a short position of Magna International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knight Therapeutics and Magna International.
Diversification Opportunities for Knight Therapeutics and Magna International
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Knight and Magna is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Knight Therapeutics and Magna International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna International and Knight Therapeutics 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 Knight Therapeutics 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 Knight Therapeutics i.e., Knight Therapeutics and Magna International go up and down completely randomly.
Pair Corralation between Knight Therapeutics and Magna International
Assuming the 90 days trading horizon Knight Therapeutics is expected to under-perform the Magna International. In addition to that, Knight Therapeutics is 1.25 times more volatile than Magna International. It trades about -0.06 of its total potential returns per unit of risk. Magna International is currently generating about 0.14 per unit of volatility. If you would invest 5,780 in Magna International on August 24, 2024 and sell it today you would earn a total of 384.00 from holding Magna International or generate 6.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Knight Therapeutics vs. Magna International
Performance |
| Timeline |
| Knight Therapeutics |
| Magna International |
Knight Therapeutics and Magna International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knight Therapeutics and Magna International
The main advantage of trading using opposite Knight Therapeutics and Magna International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knight Therapeutics 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.| Knight Therapeutics vs. Stella Jones | Knight Therapeutics vs. Richelieu Hardware | Knight Therapeutics vs. Element Fleet Management | Knight Therapeutics vs. ECN Capital Corp |
| Magna International vs. Canadian National Railway | Magna International vs. Nutrien | Magna International vs. Restaurant Brands International | Magna International vs. Canadian Pacific Railway |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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