Correlation Between Magna International and Marine Products
Can any of the company-specific risk be diversified away by investing in both Magna International and Marine Products 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 Marine Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magna International and Marine Products, you can compare the effects of market volatilities on Magna International and Marine Products 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 Marine Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magna International and Marine Products.
Diversification Opportunities for Magna International and Marine Products
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Magna and Marine is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Magna International and Marine Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marine Products 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 Marine Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marine Products has no effect on the direction of Magna International i.e., Magna International and Marine Products go up and down completely randomly.
Pair Corralation between Magna International and Marine Products
Considering the 90-day investment horizon Magna International is expected to under-perform the Marine Products. But the stock apears to be less risky and, when comparing its historical volatility, Magna International is 1.24 times less risky than Marine Products. The stock trades about -0.01 of its potential returns per unit of risk. The Marine Products is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,051 in Marine Products on August 31, 2024 and sell it today you would lose (62.00) from holding Marine Products or give up 5.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.79% |
| Values | Daily Returns |
Magna International vs. Marine Products
Performance |
| Timeline |
| Magna International |
| Marine Products |
Magna International and Marine Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magna International and Marine Products
The main advantage of trading using opposite Magna International and Marine Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna International position performs unexpectedly, Marine Products 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 Marine Products will offset losses from the drop in Marine Products' long position.| Magna International vs. Allison Transmission Holdings | Magna International vs. Aptiv PLC | Magna International vs. LKQ Corporation | Magna International vs. Lear Corporation |
| Marine Products vs. Vision Marine Technologies | Marine Products vs. EZGO Technologies | Marine Products vs. LCI Industries | Marine Products vs. Curtiss Motorcycles |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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