Correlation Between Magnite and Lendway
Can any of the company-specific risk be diversified away by investing in both Magnite and Lendway 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 Magnite and Lendway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magnite and Lendway, you can compare the effects of market volatilities on Magnite and Lendway 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 Magnite with a short position of Lendway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnite and Lendway.
Diversification Opportunities for Magnite and Lendway
Very weak diversification
The 3 months correlation between Magnite and Lendway is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Magnite and Lendway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendway and Magnite 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 Magnite are associated (or correlated) with Lendway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lendway has no effect on the direction of Magnite i.e., Magnite and Lendway go up and down completely randomly.
Pair Corralation between Magnite and Lendway
Given the investment horizon of 90 days Magnite is expected to generate 1.2 times less return on investment than Lendway. But when comparing it to its historical volatility, Magnite is 1.62 times less risky than Lendway. It trades about 0.31 of its potential returns per unit of risk. Lendway is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 328.00 in Lendway on August 31, 2024 and sell it today you would earn a total of 113.00 from holding Lendway or generate 34.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magnite vs. Lendway
Performance |
| Timeline |
| Magnite |
| Lendway |
Magnite and Lendway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magnite and Lendway
The main advantage of trading using opposite Magnite and Lendway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnite position performs unexpectedly, Lendway 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 Lendway will offset losses from the drop in Lendway's long position.| Magnite vs. Mirriad Advertising plc | Magnite vs. INEO Tech Corp | Magnite vs. Marchex | Magnite vs. Entravision Communications |
| Lendway vs. Perseus Mining Limited | Lendway vs. National Beverage Corp | Lendway vs. Verde Clean Fuels | Lendway vs. China Tontine Wines |
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 Positions Ratings module to 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.
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