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
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Magna and Cooper is 0.61. 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 1.57 times less return on investment than Cooper Standard. But when comparing it to its historical volatility, Magna International is 1.82 times less risky than Cooper Standard. It trades about 0.11 of its potential returns per unit of risk. Cooper Standard Holdings is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,240 in Cooper Standard Holdings on August 30, 2024 and sell it today you would earn a total of 110.00 from holding Cooper Standard Holdings or generate 8.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| 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. Waste Management | Magna International vs. CeoTronics AG | Magna International vs. Corporate Travel Management | Magna International vs. EAST SIDE GAMES |
| Cooper Standard vs. Choice Hotels International | Cooper Standard vs. Sunstone Hotel Investors | Cooper Standard vs. NH HOTEL GROUP | Cooper Standard vs. Singapore Airlines 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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