Correlation Between Magna International and Ferrari NV
Can any of the company-specific risk be diversified away by investing in both Magna International and Ferrari NV 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 Ferrari NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magna International and Ferrari NV, you can compare the effects of market volatilities on Magna International and Ferrari NV 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 Ferrari NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magna International and Ferrari NV.
Diversification Opportunities for Magna International and Ferrari NV
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Magna and Ferrari is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Magna International and Ferrari NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferrari NV 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 Ferrari NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferrari NV has no effect on the direction of Magna International i.e., Magna International and Ferrari NV go up and down completely randomly.
Pair Corralation between Magna International and Ferrari NV
Considering the 90-day investment horizon Magna International is expected to under-perform the Ferrari NV. In addition to that, Magna International is 1.5 times more volatile than Ferrari NV. It trades about -0.1 of its total potential returns per unit of risk. Ferrari NV is currently generating about 0.12 per unit of volatility. If you would invest 41,742 in Ferrari NV on November 4, 2024 and sell it today you would earn a total of 1,110 from holding Ferrari NV or generate 2.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magna International vs. Ferrari NV
Performance |
| Timeline |
| Magna International |
| Ferrari NV |
Magna International and Ferrari NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magna International and Ferrari NV
The main advantage of trading using opposite Magna International and Ferrari NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna International position performs unexpectedly, Ferrari NV 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 Ferrari NV will offset losses from the drop in Ferrari NV's long position.| Magna International vs. Allison Transmission Holdings | Magna International vs. Aptiv PLC | Magna International vs. LKQ Corporation | Magna International vs. Lear Corporation |
| Ferrari NV vs. Volkswagen AG Pref | Ferrari NV vs. Volkswagen AG 110 | Ferrari NV vs. Porsche Automobil Holding | Ferrari NV vs. Toyota Motor |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |