Correlation Between MAGNA INTL and INFORMATION SVC
Can any of the company-specific risk be diversified away by investing in both MAGNA INTL and INFORMATION SVC 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 INFORMATION SVC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MAGNA INTL and INFORMATION SVC GRP, you can compare the effects of market volatilities on MAGNA INTL and INFORMATION SVC 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 INFORMATION SVC. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAGNA INTL and INFORMATION SVC.
Diversification Opportunities for MAGNA INTL and INFORMATION SVC
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MAGNA and INFORMATION is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding MAGNA INTL and INFORMATION SVC GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INFORMATION SVC GRP 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 INFORMATION SVC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INFORMATION SVC GRP has no effect on the direction of MAGNA INTL i.e., MAGNA INTL and INFORMATION SVC go up and down completely randomly.
Pair Corralation between MAGNA INTL and INFORMATION SVC
Assuming the 90 days trading horizon MAGNA INTL is expected to generate 2.31 times less return on investment than INFORMATION SVC. But when comparing it to its historical volatility, MAGNA INTL is 1.07 times less risky than INFORMATION SVC. It trades about 0.04 of its potential returns per unit of risk. INFORMATION SVC GRP is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 275.00 in INFORMATION SVC GRP on September 5, 2024 and sell it today you would earn a total of 71.00 from holding INFORMATION SVC GRP or generate 25.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAGNA INTL vs. INFORMATION SVC GRP
Performance |
| Timeline |
| MAGNA INTL |
| INFORMATION SVC GRP |
MAGNA INTL and INFORMATION SVC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAGNA INTL and INFORMATION SVC
The main advantage of trading using opposite MAGNA INTL and INFORMATION SVC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAGNA INTL position performs unexpectedly, INFORMATION SVC 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 INFORMATION SVC will offset losses from the drop in INFORMATION SVC's long position.| MAGNA INTL vs. Datadog | MAGNA INTL vs. DATANG INTL POW | MAGNA INTL vs. Pure Storage | MAGNA INTL vs. INFORMATION SVC GRP |
| INFORMATION SVC vs. TOTAL GABON | INFORMATION SVC vs. Walgreens Boots Alliance | INFORMATION SVC vs. Peak Resources Limited |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |