Correlation Between Magna International and SAG Holdings
Can any of the company-specific risk be diversified away by investing in both Magna International and SAG Holdings 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 SAG Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magna International and SAG Holdings Limited, you can compare the effects of market volatilities on Magna International and SAG Holdings 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 SAG Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magna International and SAG Holdings.
Diversification Opportunities for Magna International and SAG Holdings
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Magna and SAG is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Magna International and SAG Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAG Holdings Limited 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 SAG Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAG Holdings Limited has no effect on the direction of Magna International i.e., Magna International and SAG Holdings go up and down completely randomly.
Pair Corralation between Magna International and SAG Holdings
Considering the 90-day investment horizon Magna International is expected to generate 0.25 times more return on investment than SAG Holdings. However, Magna International is 4.01 times less risky than SAG Holdings. It trades about -0.03 of its potential returns per unit of risk. SAG Holdings Limited is currently generating about -0.42 per unit of risk. If you would invest 5,343 in Magna International on August 27, 2024 and sell it today you would lose (835.00) from holding Magna International or give up 15.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 9.68% |
| Values | Daily Returns |
Magna International vs. SAG Holdings Limited
Performance |
| Timeline |
| Magna International |
| SAG Holdings Limited |
Magna International and SAG Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magna International and SAG Holdings
The main advantage of trading using opposite Magna International and SAG Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna International position performs unexpectedly, SAG Holdings 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 SAG Holdings will offset losses from the drop in SAG Holdings' long position.| Magna International vs. Allison Transmission Holdings | Magna International vs. Aptiv PLC | Magna International vs. LKQ Corporation | Magna International vs. Lear Corporation |
| SAG Holdings vs. Ingram Micro Holding | SAG Holdings vs. Hewlett Packard Enterprise | SAG Holdings vs. Global Partners LP | SAG Holdings vs. WESCO International |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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