Correlation Between Magna International and Identiv
Can any of the company-specific risk be diversified away by investing in both Magna International and Identiv 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 Identiv into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magna International and Identiv, you can compare the effects of market volatilities on Magna International and Identiv 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 Identiv. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magna International and Identiv.
Diversification Opportunities for Magna International and Identiv
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Magna and Identiv is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Magna International and Identiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Identiv 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 Identiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Identiv has no effect on the direction of Magna International i.e., Magna International and Identiv go up and down completely randomly.
Pair Corralation between Magna International and Identiv
Assuming the 90 days horizon Magna International is expected to generate 0.92 times more return on investment than Identiv. However, Magna International is 1.09 times less risky than Identiv. It trades about 0.16 of its potential returns per unit of risk. Identiv is currently generating about 0.11 per unit of risk. If you would invest 3,804 in Magna International on August 31, 2024 and sell it today you would earn a total of 386.00 from holding Magna International or generate 10.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magna International vs. Identiv
Performance |
| Timeline |
| Magna International |
| Identiv |
Magna International and Identiv Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magna International and Identiv
The main advantage of trading using opposite Magna International and Identiv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna International position performs unexpectedly, Identiv 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 Identiv will offset losses from the drop in Identiv's long position.| Magna International vs. Wizz Air Holdings | Magna International vs. Alaska Air Group | Magna International vs. CENTURIA OFFICE REIT | Magna International vs. Aedas Homes SA |
| Identiv vs. SANOK RUBBER ZY | Identiv vs. WisdomTree Investments | Identiv vs. GOODYEAR T RUBBER | Identiv vs. Materialise NV |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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