Correlation Between Magna International and Genuine Parts
Can any of the company-specific risk be diversified away by investing in both Magna International and Genuine Parts 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 Genuine Parts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magna International and Genuine Parts Co, you can compare the effects of market volatilities on Magna International and Genuine Parts 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 Genuine Parts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magna International and Genuine Parts.
Diversification Opportunities for Magna International and Genuine Parts
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Magna and Genuine is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Magna International and Genuine Parts Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genuine Parts 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 Genuine Parts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genuine Parts has no effect on the direction of Magna International i.e., Magna International and Genuine Parts go up and down completely randomly.
Pair Corralation between Magna International and Genuine Parts
Considering the 90-day investment horizon Magna International is expected to under-perform the Genuine Parts. In addition to that, Magna International is 1.51 times more volatile than Genuine Parts Co. It trades about -0.22 of its total potential returns per unit of risk. Genuine Parts Co is currently generating about 0.02 per unit of volatility. If you would invest 11,729 in Genuine Parts Co on October 25, 2024 and sell it today you would earn a total of 37.00 from holding Genuine Parts Co or generate 0.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Magna International vs. Genuine Parts Co
Performance |
| Timeline |
| Magna International |
| Genuine Parts |
Magna International and Genuine Parts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magna International and Genuine Parts
The main advantage of trading using opposite Magna International and Genuine Parts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna International position performs unexpectedly, Genuine Parts 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 Genuine Parts will offset losses from the drop in Genuine Parts' long position.| Magna International vs. Gentex | Magna International vs. Autoliv | Magna International vs. Fox Factory Holding | Magna International vs. Dana Inc |
| Genuine Parts vs. Dover | Genuine Parts vs. Cincinnati Financial | Genuine Parts vs. Leggett Platt Incorporated | Genuine Parts vs. WW Grainger |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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