Correlation Between Magna International and Dno ASA
Can any of the company-specific risk be diversified away by investing in both Magna International and Dno ASA 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 Dno ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magna International and Dno ASA, you can compare the effects of market volatilities on Magna International and Dno ASA 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 Dno ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magna International and Dno ASA.
Diversification Opportunities for Magna International and Dno ASA
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Magna and Dno is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Magna International and Dno ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dno ASA 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 Dno ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dno ASA has no effect on the direction of Magna International i.e., Magna International and Dno ASA go up and down completely randomly.
Pair Corralation between Magna International and Dno ASA
Assuming the 90 days horizon Magna International is expected to under-perform the Dno ASA. But the stock apears to be less risky and, when comparing its historical volatility, Magna International is 1.21 times less risky than Dno ASA. The stock trades about -0.03 of its potential returns per unit of risk. The Dno ASA is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,401 in Dno ASA on October 10, 2024 and sell it today you would lose (72.00) from holding Dno ASA or give up 5.14% 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. Dno ASA
Performance |
| Timeline |
| Magna International |
| Dno ASA |
Magna International and Dno ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magna International and Dno ASA
The main advantage of trading using opposite Magna International and Dno ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna International position performs unexpectedly, Dno ASA 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 Dno ASA will offset losses from the drop in Dno ASA'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 |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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