Correlation Between Magna International and Falcons Beyond

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Can any of the company-specific risk be diversified away by investing in both Magna International and Falcons Beyond 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 Falcons Beyond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magna International and Falcons Beyond Global,, you can compare the effects of market volatilities on Magna International and Falcons Beyond 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 Falcons Beyond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magna International and Falcons Beyond.

Diversification Opportunities for Magna International and Falcons Beyond

0.41
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Magna and Falcons is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Magna International and Falcons Beyond Global, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcons Beyond Global, 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 Falcons Beyond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcons Beyond Global, has no effect on the direction of Magna International i.e., Magna International and Falcons Beyond go up and down completely randomly.

Pair Corralation between Magna International and Falcons Beyond

Considering the 90-day investment horizon Magna International is expected to generate 0.29 times more return on investment than Falcons Beyond. However, Magna International is 3.51 times less risky than Falcons Beyond. It trades about -0.17 of its potential returns per unit of risk. Falcons Beyond Global, is currently generating about -0.53 per unit of risk. If you would invest  4,205  in Magna International on October 24, 2024 and sell it today you would lose (170.00) from holding Magna International or give up 4.04% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Magna International  vs.  Falcons Beyond Global,

 Performance 
       Timeline  
Magna International 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Magna International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Magna International is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
Falcons Beyond Global, 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Falcons Beyond Global, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Magna International and Falcons Beyond Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Magna International and Falcons Beyond

The main advantage of trading using opposite Magna International and Falcons Beyond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna International position performs unexpectedly, Falcons Beyond 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 Falcons Beyond will offset losses from the drop in Falcons Beyond's long position.
The idea behind Magna International and Falcons Beyond Global, pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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