Correlation Between Magna International and Cars
Can any of the company-specific risk be diversified away by investing in both Magna International and Cars 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 Cars into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magna International and Cars Inc, you can compare the effects of market volatilities on Magna International and Cars 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 Cars. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magna International and Cars.
Diversification Opportunities for Magna International and Cars
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Magna and Cars is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Magna International and Cars Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cars Inc 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 Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cars Inc has no effect on the direction of Magna International i.e., Magna International and Cars go up and down completely randomly.
Pair Corralation between Magna International and Cars
Considering the 90-day investment horizon Magna International is expected to generate 1.21 times less return on investment than Cars. In addition to that, Magna International is 1.04 times more volatile than Cars Inc. It trades about 0.07 of its total potential returns per unit of risk. Cars Inc is currently generating about 0.08 per unit of volatility. If you would invest 1,784 in Cars Inc on August 30, 2024 and sell it today you would earn a total of 186.00 from holding Cars Inc or generate 10.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magna International vs. Cars Inc
Performance |
| Timeline |
| Magna International |
| Cars Inc |
Magna International and Cars Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magna International and Cars
The main advantage of trading using opposite Magna International and Cars positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna International position performs unexpectedly, Cars 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 Cars will offset losses from the drop in Cars' long position.| Magna International vs. Allison Transmission Holdings | Magna International vs. Aptiv PLC | Magna International vs. Lear Corporation | Magna International vs. BorgWarner |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |