Correlation Between Magna International and Luminar Technologies
Can any of the company-specific risk be diversified away by investing in both Magna International and Luminar Technologies 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 Luminar Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magna International and Luminar Technologies, you can compare the effects of market volatilities on Magna International and Luminar Technologies 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 Luminar Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magna International and Luminar Technologies.
Diversification Opportunities for Magna International and Luminar Technologies
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Magna and Luminar is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Magna International and Luminar Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luminar Technologies 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 Luminar Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luminar Technologies has no effect on the direction of Magna International i.e., Magna International and Luminar Technologies go up and down completely randomly.
Pair Corralation between Magna International and Luminar Technologies
Considering the 90-day investment horizon Magna International is expected to generate 0.32 times more return on investment than Luminar Technologies. However, Magna International is 3.15 times less risky than Luminar Technologies. It trades about 0.17 of its potential returns per unit of risk. Luminar Technologies is currently generating about -0.17 per unit of risk. If you would invest 4,116 in Magna International on August 30, 2024 and sell it today you would earn a total of 379.00 from holding Magna International or generate 9.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Magna International vs. Luminar Technologies
Performance |
| Timeline |
| Magna International |
| Luminar Technologies |
Magna International and Luminar Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magna International and Luminar Technologies
The main advantage of trading using opposite Magna International and Luminar Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna International position performs unexpectedly, Luminar Technologies 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 Luminar Technologies will offset losses from the drop in Luminar Technologies' long position.| Magna International vs. Allison Transmission Holdings | Magna International vs. Aptiv PLC | Magna International vs. LKQ Corporation | Magna International vs. Lear Corporation |
| Luminar Technologies vs. Mobileye Global Class | Luminar Technologies vs. Hyliion Holdings Corp | Luminar Technologies vs. Aeva Technologies | Luminar Technologies vs. Innoviz Technologies |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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