Correlation Between Magna International and Standard
Can any of the company-specific risk be diversified away by investing in both Magna International and Standard 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 Standard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magna International and Standard Motor Products, you can compare the effects of market volatilities on Magna International and Standard 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 Standard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magna International and Standard.
Diversification Opportunities for Magna International and Standard
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Magna and Standard is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Magna International and Standard Motor Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Motor 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 Standard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Motor Products has no effect on the direction of Magna International i.e., Magna International and Standard go up and down completely randomly.
Pair Corralation between Magna International and Standard
Considering the 90-day investment horizon Magna International is expected to generate 0.69 times more return on investment than Standard. However, Magna International is 1.45 times less risky than Standard. It trades about 0.05 of its potential returns per unit of risk. Standard Motor Products is currently generating about 0.02 per unit of risk. If you would invest 4,210 in Magna International on August 23, 2024 and sell it today you would earn a total of 204.00 from holding Magna International or generate 4.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magna International vs. Standard Motor Products
Performance |
| Timeline |
| Magna International |
| Standard Motor Products |
Magna International and Standard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magna International and Standard
The main advantage of trading using opposite Magna International and Standard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna International position performs unexpectedly, Standard 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 Standard will offset losses from the drop in Standard's long position.| Magna International vs. Allison Transmission Holdings | Magna International vs. Aptiv PLC | Magna International vs. LKQ Corporation | Magna International vs. Lear Corporation |
| Standard vs. Dorman Products | Standard vs. Motorcar Parts of | Standard vs. Douglas Dynamics | Standard vs. Stoneridge |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |