Correlation Between Marchex and Magnite
Can any of the company-specific risk be diversified away by investing in both Marchex and Magnite 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 Marchex and Magnite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marchex and Magnite, you can compare the effects of market volatilities on Marchex and Magnite 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 Marchex with a short position of Magnite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marchex and Magnite.
Diversification Opportunities for Marchex and Magnite
Good diversification
The 3 months correlation between Marchex and Magnite is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Marchex and Magnite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnite and Marchex 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 Marchex are associated (or correlated) with Magnite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnite has no effect on the direction of Marchex i.e., Marchex and Magnite go up and down completely randomly.
Pair Corralation between Marchex and Magnite
Given the investment horizon of 90 days Marchex is expected to under-perform the Magnite. But the stock apears to be less risky and, when comparing its historical volatility, Marchex is 1.06 times less risky than Magnite. The stock trades about -0.01 of its potential returns per unit of risk. The Magnite is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 1,251 in Magnite on August 24, 2024 and sell it today you would earn a total of 404.00 from holding Magnite or generate 32.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Marchex vs. Magnite
Performance |
| Timeline |
| Marchex |
| Magnite |
Marchex and Magnite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marchex and Magnite
The main advantage of trading using opposite Marchex and Magnite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marchex position performs unexpectedly, Magnite 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 Magnite will offset losses from the drop in Magnite's long position.| Marchex vs. Entravision Communications | Marchex vs. Direct Digital Holdings | Marchex vs. Cimpress NV | Marchex vs. Townsquare Media |
| Magnite vs. Deluxe | Magnite vs. Clear Channel Outdoor | Magnite vs. Entravision Communications | Magnite vs. Innovid Corp |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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