Correlation Between Magna International and Cooper Standard
Can any of the company-specific risk be diversified away by investing in both Magna International and Cooper Standard 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 Cooper Standard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magna International and Cooper Standard Holdings, you can compare the effects of market volatilities on Magna International and Cooper Standard 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 Cooper Standard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magna International and Cooper Standard.
Diversification Opportunities for Magna International and Cooper Standard
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Magna and Cooper is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Magna International and Cooper Standard Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cooper Standard Holdings 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 Cooper Standard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cooper Standard Holdings has no effect on the direction of Magna International i.e., Magna International and Cooper Standard go up and down completely randomly.
Pair Corralation between Magna International and Cooper Standard
Assuming the 90 days horizon Magna International is expected to generate 0.48 times more return on investment than Cooper Standard. However, Magna International is 2.08 times less risky than Cooper Standard. It trades about -0.12 of its potential returns per unit of risk. Cooper Standard Holdings is currently generating about -0.09 per unit of risk. If you would invest 3,878 in Magna International on November 28, 2024 and sell it today you would lose (258.00) from holding Magna International or give up 6.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magna International vs. Cooper Standard Holdings
Performance |
| Timeline |
| Magna International |
| Cooper Standard Holdings |
Magna International and Cooper Standard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magna International and Cooper Standard
The main advantage of trading using opposite Magna International and Cooper Standard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna International position performs unexpectedly, Cooper Standard 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 Cooper Standard will offset losses from the drop in Cooper Standard's long position.| Magna International vs. Thai Beverage Public | Magna International vs. Moneysupermarket Group PLC | Magna International vs. PATTIES FOODS | Magna International vs. Dairy Farm International |
| Cooper Standard vs. United Rentals | Cooper Standard vs. Sixt Leasing SE | Cooper Standard vs. AviChina Industry Technology | Cooper Standard vs. FANDIFI TECHNOLOGY P |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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