Correlation Between METTLER TOLEDO and MAGNA INTL
Can any of the company-specific risk be diversified away by investing in both METTLER TOLEDO and MAGNA INTL 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 METTLER TOLEDO and MAGNA INTL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between METTLER TOLEDO INTL and MAGNA INTL, you can compare the effects of market volatilities on METTLER TOLEDO and MAGNA INTL 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 METTLER TOLEDO with a short position of MAGNA INTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of METTLER TOLEDO and MAGNA INTL.
Diversification Opportunities for METTLER TOLEDO and MAGNA INTL
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between METTLER and MAGNA is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding METTLER TOLEDO INTL and MAGNA INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAGNA INTL and METTLER TOLEDO 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 METTLER TOLEDO INTL are associated (or correlated) with MAGNA INTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAGNA INTL has no effect on the direction of METTLER TOLEDO i.e., METTLER TOLEDO and MAGNA INTL go up and down completely randomly.
Pair Corralation between METTLER TOLEDO and MAGNA INTL
Assuming the 90 days trading horizon METTLER TOLEDO INTL is expected to under-perform the MAGNA INTL. But the stock apears to be less risky and, when comparing its historical volatility, METTLER TOLEDO INTL is 1.04 times less risky than MAGNA INTL. The stock trades about -0.04 of its potential returns per unit of risk. The MAGNA INTL is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 4,063 in MAGNA INTL on September 1, 2024 and sell it today you would earn a total of 164.00 from holding MAGNA INTL or generate 4.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.24% |
| Values | Daily Returns |
METTLER TOLEDO INTL vs. MAGNA INTL
Performance |
| Timeline |
| METTLER TOLEDO INTL |
| MAGNA INTL |
METTLER TOLEDO and MAGNA INTL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with METTLER TOLEDO and MAGNA INTL
The main advantage of trading using opposite METTLER TOLEDO and MAGNA INTL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if METTLER TOLEDO position performs unexpectedly, MAGNA INTL 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 MAGNA INTL will offset losses from the drop in MAGNA INTL's long position.| METTLER TOLEDO vs. SIVERS SEMICONDUCTORS AB | METTLER TOLEDO vs. Darden Restaurants | METTLER TOLEDO vs. Reliance Steel Aluminum | METTLER TOLEDO vs. Q2M Managementberatung AG |
| MAGNA INTL vs. Arrow Electronics | MAGNA INTL vs. Citic Telecom International | MAGNA INTL vs. Nucletron Electronic Aktiengesellschaft | MAGNA INTL vs. ELECTRONIC ARTS |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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