Correlation Between Magna International and Superior Plus
Can any of the company-specific risk be diversified away by investing in both Magna International and Superior Plus 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 International and Superior Plus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magna International and Superior Plus Corp, you can compare the effects of market volatilities on Magna International and Superior Plus 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 International with a short position of Superior Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magna International and Superior Plus.
Diversification Opportunities for Magna International and Superior Plus
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Magna and Superior is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Magna International and Superior Plus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Plus Corp and Magna International 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 International are associated (or correlated) with Superior Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Plus Corp has no effect on the direction of Magna International i.e., Magna International and Superior Plus go up and down completely randomly.
Pair Corralation between Magna International and Superior Plus
Assuming the 90 days horizon Magna International is expected to under-perform the Superior Plus. In addition to that, Magna International is 1.5 times more volatile than Superior Plus Corp. It trades about -0.18 of its total potential returns per unit of risk. Superior Plus Corp is currently generating about -0.18 per unit of volatility. If you would invest 416.00 in Superior Plus Corp on November 29, 2024 and sell it today you would lose (26.00) from holding Superior Plus Corp or give up 6.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magna International vs. Superior Plus Corp
Performance |
| Timeline |
| Magna International |
| Superior Plus Corp |
Magna International and Superior Plus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magna International and Superior Plus
The main advantage of trading using opposite Magna International and Superior Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna International position performs unexpectedly, Superior Plus 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 Superior Plus will offset losses from the drop in Superior Plus' long position.| Magna International vs. Gruppo Mutuionline SpA | Magna International vs. GungHo Online Entertainment | Magna International vs. USWE SPORTS AB | Magna International vs. GUILD ESPORTS PLC |
| Superior Plus vs. Easy Software AG | Superior Plus vs. COSMOSTEEL HLDGS | Superior Plus vs. CHAMPION IRON | Superior Plus vs. KOBE STEEL LTD |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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