Correlation Between Linamar and Martinrea International
Can any of the company-specific risk be diversified away by investing in both Linamar and Martinrea 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 Linamar and Martinrea International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Linamar and Martinrea International, you can compare the effects of market volatilities on Linamar and Martinrea 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 Linamar with a short position of Martinrea International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Linamar and Martinrea International.
Diversification Opportunities for Linamar and Martinrea International
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Linamar and Martinrea is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Linamar and Martinrea International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martinrea International and Linamar 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 Linamar are associated (or correlated) with Martinrea International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martinrea International has no effect on the direction of Linamar i.e., Linamar and Martinrea International go up and down completely randomly.
Pair Corralation between Linamar and Martinrea International
Assuming the 90 days trading horizon Linamar is expected to generate 0.85 times more return on investment than Martinrea International. However, Linamar is 1.18 times less risky than Martinrea International. It trades about -0.01 of its potential returns per unit of risk. Martinrea International is currently generating about -0.02 per unit of risk. If you would invest 7,123 in Linamar on August 27, 2024 and sell it today you would lose (938.00) from holding Linamar or give up 13.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Linamar vs. Martinrea International
Performance |
| Timeline |
| Linamar |
| Martinrea International |
Linamar and Martinrea International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Linamar and Martinrea International
The main advantage of trading using opposite Linamar and Martinrea International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Linamar position performs unexpectedly, Martinrea 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 Martinrea International will offset losses from the drop in Martinrea International's long position.| Linamar vs. Martinrea International | Linamar vs. Magna International | Linamar vs. CCL Industries | Linamar vs. Stella Jones |
| Martinrea International vs. Linamar | Martinrea International vs. Aecon Group | Martinrea International vs. NFI Group | Martinrea International vs. Element Fleet Management |
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 Stocks Directory module to find actively traded stocks across global markets.
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