Correlation Between Magna International and Aeye
Can any of the company-specific risk be diversified away by investing in both Magna International and Aeye 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 Aeye into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magna International and Aeye Inc, you can compare the effects of market volatilities on Magna International and Aeye 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 Aeye. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magna International and Aeye.
Diversification Opportunities for Magna International and Aeye
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Magna and Aeye is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Magna International and Aeye Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeye Inc 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 Aeye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeye Inc has no effect on the direction of Magna International i.e., Magna International and Aeye go up and down completely randomly.
Pair Corralation between Magna International and Aeye
Considering the 90-day investment horizon Magna International is expected to generate 0.49 times more return on investment than Aeye. However, Magna International is 2.03 times less risky than Aeye. It trades about 0.12 of its potential returns per unit of risk. Aeye Inc is currently generating about -0.01 per unit of risk. If you would invest 4,060 in Magna International on August 30, 2024 and sell it today you would earn a total of 435.00 from holding Magna International or generate 10.71% 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. Aeye Inc
Performance |
| Timeline |
| Magna International |
| Aeye Inc |
Magna International and Aeye Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magna International and Aeye
The main advantage of trading using opposite Magna International and Aeye positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna International position performs unexpectedly, Aeye 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 Aeye will offset losses from the drop in Aeye's long position.| Magna International vs. Allison Transmission Holdings | Magna International vs. Aptiv PLC | Magna International vs. LKQ Corporation | Magna International vs. Lear Corporation |
| Aeye vs. Innoviz Technologies | Aeye vs. Luminar Technologies | Aeye vs. Hesai Group American | Aeye vs. Mobileye Global Class |
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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