Correlation Between Luminar Technologies and Magna International
Can any of the company-specific risk be diversified away by investing in both Luminar Technologies 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 Luminar Technologies and Magna International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luminar Technologies and Magna International, you can compare the effects of market volatilities on Luminar Technologies 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 Luminar Technologies with a short position of Magna International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luminar Technologies and Magna International.
Diversification Opportunities for Luminar Technologies and Magna International
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Luminar and Magna is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Luminar Technologies and Magna International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna International and Luminar Technologies 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 Luminar Technologies 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 Luminar Technologies i.e., Luminar Technologies and Magna International go up and down completely randomly.
Pair Corralation between Luminar Technologies and Magna International
Given the investment horizon of 90 days Luminar Technologies is expected to under-perform the Magna International. In addition to that, Luminar Technologies is 3.15 times more volatile than Magna International. It trades about -0.17 of its total potential returns per unit of risk. Magna International is currently generating about 0.17 per unit of volatility. If you would invest 4,116 in Magna International on August 30, 2024 and sell it today you would earn a total of 379.00 from holding Magna International or generate 9.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Luminar Technologies vs. Magna International
Performance |
| Timeline |
| Luminar Technologies |
| Magna International |
Luminar Technologies and Magna International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luminar Technologies and Magna International
The main advantage of trading using opposite Luminar Technologies and Magna International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luminar Technologies 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.| Luminar Technologies vs. Mobileye Global Class | Luminar Technologies vs. Hyliion Holdings Corp | Luminar Technologies vs. Aeva Technologies | Luminar Technologies vs. Innoviz Technologies |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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