Correlation Between Magna International and Continental Aktiengesellscha
Can any of the company-specific risk be diversified away by investing in both Magna International and Continental Aktiengesellscha 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 Continental Aktiengesellscha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magna International and Continental Aktiengesellschaft, you can compare the effects of market volatilities on Magna International and Continental Aktiengesellscha 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 Continental Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magna International and Continental Aktiengesellscha.
Diversification Opportunities for Magna International and Continental Aktiengesellscha
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Magna and Continental is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Magna International and Continental Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental Aktiengesellscha 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 Continental Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental Aktiengesellscha has no effect on the direction of Magna International i.e., Magna International and Continental Aktiengesellscha go up and down completely randomly.
Pair Corralation between Magna International and Continental Aktiengesellscha
Assuming the 90 days horizon Magna International is expected to under-perform the Continental Aktiengesellscha. But the stock apears to be less risky and, when comparing its historical volatility, Magna International is 1.07 times less risky than Continental Aktiengesellscha. The stock trades about -0.03 of its potential returns per unit of risk. The Continental Aktiengesellschaft is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 7,105 in Continental Aktiengesellschaft on October 10, 2024 and sell it today you would lose (589.00) from holding Continental Aktiengesellschaft or give up 8.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Magna International vs. Continental Aktiengesellschaft
Performance |
| Timeline |
| Magna International |
| Continental Aktiengesellscha |
Magna International and Continental Aktiengesellscha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magna International and Continental Aktiengesellscha
The main advantage of trading using opposite Magna International and Continental Aktiengesellscha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna International position performs unexpectedly, Continental Aktiengesellscha 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 Continental Aktiengesellscha will offset losses from the drop in Continental Aktiengesellscha's long position.| Magna International vs. ULTRA CLEAN HLDGS | Magna International vs. ALBIS LEASING AG | Magna International vs. United Insurance Holdings | Magna International vs. Discover Financial Services |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |