Correlation Between Magna International and New Oriental
Can any of the company-specific risk be diversified away by investing in both Magna International and New Oriental 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 New Oriental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magna International and New Oriental Education, you can compare the effects of market volatilities on Magna International and New Oriental 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 New Oriental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magna International and New Oriental.
Diversification Opportunities for Magna International and New Oriental
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Magna and New is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Magna International and New Oriental Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Oriental Education 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 New Oriental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Oriental Education has no effect on the direction of Magna International i.e., Magna International and New Oriental go up and down completely randomly.
Pair Corralation between Magna International and New Oriental
Assuming the 90 days trading horizon Magna International is expected to generate 0.55 times more return on investment than New Oriental. However, Magna International is 1.83 times less risky than New Oriental. It trades about 0.08 of its potential returns per unit of risk. New Oriental Education is currently generating about 0.01 per unit of risk. If you would invest 73,817 in Magna International on September 2, 2024 and sell it today you would earn a total of 10,014 from holding Magna International or generate 13.57% 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. New Oriental Education
Performance |
| Timeline |
| Magna International |
| New Oriental Education |
Magna International and New Oriental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magna International and New Oriental
The main advantage of trading using opposite Magna International and New Oriental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna International position performs unexpectedly, New Oriental 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 New Oriental will offset losses from the drop in New Oriental's long position.| Magna International vs. New Oriental Education | Magna International vs. Genworth Financial | Magna International vs. Deutsche Bank Aktiengesellschaft | Magna International vs. Monster Beverage Corp |
| New Oriental vs. Grupo Sports World | New Oriental vs. GMxico Transportes SAB | New Oriental vs. Hoteles City Express | New Oriental vs. UnitedHealth Group Incorporated |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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