Correlation Between Magna International and Xos
Can any of the company-specific risk be diversified away by investing in both Magna International and Xos 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 Xos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magna International and Xos Inc, you can compare the effects of market volatilities on Magna International and Xos 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 Xos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magna International and Xos.
Diversification Opportunities for Magna International and Xos
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Magna and Xos is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Magna International and Xos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xos 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 Xos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xos Inc has no effect on the direction of Magna International i.e., Magna International and Xos go up and down completely randomly.
Pair Corralation between Magna International and Xos
Considering the 90-day investment horizon Magna International is expected to generate 0.6 times more return on investment than Xos. However, Magna International is 1.67 times less risky than Xos. It trades about 0.05 of its potential returns per unit of risk. Xos Inc is currently generating about -0.11 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magna International vs. Xos Inc
Performance |
| Timeline |
| Magna International |
| Xos Inc |
Magna International and Xos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magna International and Xos
The main advantage of trading using opposite Magna International and Xos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna International position performs unexpectedly, Xos 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 Xos will offset losses from the drop in Xos' long position.| Magna International vs. Allison Transmission Holdings | Magna International vs. Aptiv PLC | Magna International vs. LKQ Corporation | Magna International vs. Lear Corporation |
| Xos vs. Lion Electric Corp | Xos vs. Nikola Corp | Xos vs. Wabash National | Xos vs. Hydrofarm Holdings Group |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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