Correlation Between MAGNA INTL and AECOM TECHNOLOGY
Can any of the company-specific risk be diversified away by investing in both MAGNA INTL and AECOM TECHNOLOGY 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 MAGNA INTL and AECOM TECHNOLOGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MAGNA INTL and AECOM TECHNOLOGY, you can compare the effects of market volatilities on MAGNA INTL and AECOM TECHNOLOGY 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 MAGNA INTL with a short position of AECOM TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAGNA INTL and AECOM TECHNOLOGY.
Diversification Opportunities for MAGNA INTL and AECOM TECHNOLOGY
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MAGNA and AECOM is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding MAGNA INTL and AECOM TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AECOM TECHNOLOGY and MAGNA INTL 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 MAGNA INTL are associated (or correlated) with AECOM TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AECOM TECHNOLOGY has no effect on the direction of MAGNA INTL i.e., MAGNA INTL and AECOM TECHNOLOGY go up and down completely randomly.
Pair Corralation between MAGNA INTL and AECOM TECHNOLOGY
Assuming the 90 days trading horizon MAGNA INTL is expected to generate 1.38 times more return on investment than AECOM TECHNOLOGY. However, MAGNA INTL is 1.38 times more volatile than AECOM TECHNOLOGY. It trades about 0.15 of its potential returns per unit of risk. AECOM TECHNOLOGY is currently generating about 0.2 per unit of risk. If you would invest 3,520 in MAGNA INTL on September 12, 2024 and sell it today you would earn a total of 756.00 from holding MAGNA INTL or generate 21.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAGNA INTL vs. AECOM TECHNOLOGY
Performance |
| Timeline |
| MAGNA INTL |
| AECOM TECHNOLOGY |
MAGNA INTL and AECOM TECHNOLOGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAGNA INTL and AECOM TECHNOLOGY
The main advantage of trading using opposite MAGNA INTL and AECOM TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAGNA INTL position performs unexpectedly, AECOM TECHNOLOGY 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 AECOM TECHNOLOGY will offset losses from the drop in AECOM TECHNOLOGY's long position.| MAGNA INTL vs. Singapore Airlines Limited | MAGNA INTL vs. BE Semiconductor Industries | MAGNA INTL vs. Perseus Mining Limited | MAGNA INTL vs. Evolution Mining Limited |
| AECOM TECHNOLOGY vs. Apple Inc | AECOM TECHNOLOGY vs. Apple Inc | AECOM TECHNOLOGY vs. Apple Inc | AECOM TECHNOLOGY vs. Apple Inc |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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