Correlation Between Magna International and Infosys
Can any of the company-specific risk be diversified away by investing in both Magna International and Infosys 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 Infosys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magna International and Infosys Ltd ADR, you can compare the effects of market volatilities on Magna International and Infosys 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 Infosys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magna International and Infosys.
Diversification Opportunities for Magna International and Infosys
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Magna and Infosys is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Magna International and Infosys Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infosys Ltd ADR 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 Infosys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infosys Ltd ADR has no effect on the direction of Magna International i.e., Magna International and Infosys go up and down completely randomly.
Pair Corralation between Magna International and Infosys
Considering the 90-day investment horizon Magna International is expected to generate 1.47 times less return on investment than Infosys. In addition to that, Magna International is 1.79 times more volatile than Infosys Ltd ADR. It trades about 0.07 of its total potential returns per unit of risk. Infosys Ltd ADR is currently generating about 0.2 per unit of volatility. If you would invest 2,182 in Infosys Ltd ADR on August 29, 2024 and sell it today you would earn a total of 136.00 from holding Infosys Ltd ADR or generate 6.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magna International vs. Infosys Ltd ADR
Performance |
| Timeline |
| Magna International |
| Infosys Ltd ADR |
Magna International and Infosys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magna International and Infosys
The main advantage of trading using opposite Magna International and Infosys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna International position performs unexpectedly, Infosys 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 Infosys will offset losses from the drop in Infosys' long position.| Magna International vs. Allison Transmission Holdings | Magna International vs. Aptiv PLC | Magna International vs. LKQ Corporation | Magna International vs. Lear Corporation |
| Infosys vs. Data Storage Corp | Infosys vs. Usio Inc | Infosys vs. ARB IOT Group | Infosys vs. FiscalNote Holdings |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |