Correlation Between Magna International and Gentex
Can any of the company-specific risk be diversified away by investing in both Magna International and Gentex 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 Gentex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magna International and Gentex, you can compare the effects of market volatilities on Magna International and Gentex 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 Gentex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magna International and Gentex.
Diversification Opportunities for Magna International and Gentex
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Magna and Gentex is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Magna International and Gentex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gentex 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 Gentex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gentex has no effect on the direction of Magna International i.e., Magna International and Gentex go up and down completely randomly.
Pair Corralation between Magna International and Gentex
Considering the 90-day investment horizon Magna International is expected to generate 1.84 times more return on investment than Gentex. However, Magna International is 1.84 times more volatile than Gentex. It trades about 0.19 of its potential returns per unit of risk. Gentex is currently generating about -0.02 per unit of risk. If you would invest 4,250 in Magna International on August 28, 2024 and sell it today you would earn a total of 396.00 from holding Magna International or generate 9.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Magna International vs. Gentex
Performance |
| Timeline |
| Magna International |
| Gentex |
Magna International and Gentex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magna International and Gentex
The main advantage of trading using opposite Magna International and Gentex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna International position performs unexpectedly, Gentex 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 Gentex will offset losses from the drop in Gentex's long position.| Magna International vs. Allison Transmission Holdings | Magna International vs. Aptiv PLC | Magna International vs. LKQ Corporation | Magna International vs. Lear Corporation |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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