Correlation Between Orix Corp and MAGNA INTL
Can any of the company-specific risk be diversified away by investing in both Orix Corp 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 Orix Corp and MAGNA INTL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orix Corp Ads and MAGNA INTL, you can compare the effects of market volatilities on Orix Corp 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 Orix Corp with a short position of MAGNA INTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orix Corp and MAGNA INTL.
Diversification Opportunities for Orix Corp and MAGNA INTL
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Orix and MAGNA is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Orix Corp Ads and MAGNA INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAGNA INTL and Orix Corp 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 Orix Corp Ads 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 Orix Corp i.e., Orix Corp and MAGNA INTL go up and down completely randomly.
Pair Corralation between Orix Corp and MAGNA INTL
Assuming the 90 days trading horizon Orix Corp is expected to generate 1.61 times less return on investment than MAGNA INTL. But when comparing it to its historical volatility, Orix Corp Ads is 1.07 times less risky than MAGNA INTL. It trades about 0.19 of its potential returns per unit of risk. MAGNA INTL is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 3,753 in MAGNA INTL on September 1, 2024 and sell it today you would earn a total of 474.00 from holding MAGNA INTL or generate 12.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Orix Corp Ads vs. MAGNA INTL
Performance |
| Timeline |
| Orix Corp Ads |
| MAGNA INTL |
Orix Corp and MAGNA INTL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orix Corp and MAGNA INTL
The main advantage of trading using opposite Orix Corp and MAGNA INTL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orix Corp 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.| Orix Corp vs. UMC Electronics Co | Orix Corp vs. X FAB Silicon Foundries | Orix Corp vs. METHODE ELECTRONICS | Orix Corp vs. UET United Electronic |
| 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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