Correlation Between Magna International and GE Vernova
Can any of the company-specific risk be diversified away by investing in both Magna International and GE Vernova 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 GE Vernova into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magna International and GE Vernova LLC, you can compare the effects of market volatilities on Magna International and GE Vernova 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 GE Vernova. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magna International and GE Vernova.
Diversification Opportunities for Magna International and GE Vernova
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Magna and GEV is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Magna International and GE Vernova LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GE Vernova LLC 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 GE Vernova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GE Vernova LLC has no effect on the direction of Magna International i.e., Magna International and GE Vernova go up and down completely randomly.
Pair Corralation between Magna International and GE Vernova
Considering the 90-day investment horizon Magna International is expected to under-perform the GE Vernova. But the stock apears to be less risky and, when comparing its historical volatility, Magna International is 1.47 times less risky than GE Vernova. The stock trades about -0.01 of its potential returns per unit of risk. The GE Vernova LLC is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 13,125 in GE Vernova LLC on August 31, 2024 and sell it today you would earn a total of 20,465 from holding GE Vernova LLC or generate 155.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 36.27% |
| Values | Daily Returns |
Magna International vs. GE Vernova LLC
Performance |
| Timeline |
| Magna International |
| GE Vernova LLC |
Magna International and GE Vernova Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magna International and GE Vernova
The main advantage of trading using opposite Magna International and GE Vernova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna International position performs unexpectedly, GE Vernova 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 GE Vernova will offset losses from the drop in GE Vernova's long position.| Magna International vs. Allison Transmission Holdings | Magna International vs. Aptiv PLC | Magna International vs. LKQ Corporation | Magna International vs. Lear Corporation |
| GE Vernova vs. Fluence Energy | GE Vernova vs. Altus Power | GE Vernova vs. Energy Vault Holdings | GE Vernova vs. Enlight Renewable Energy |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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