Correlation Between United Homes and Magna International
Can any of the company-specific risk be diversified away by investing in both United Homes and Magna International 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 United Homes and Magna International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Homes Group and Magna International, you can compare the effects of market volatilities on United Homes and Magna International 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 United Homes with a short position of Magna International. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Homes and Magna International.
Diversification Opportunities for United Homes and Magna International
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between United and Magna is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding United Homes Group and Magna International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna International and United Homes 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 United Homes Group are associated (or correlated) with Magna International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magna International has no effect on the direction of United Homes i.e., United Homes and Magna International go up and down completely randomly.
Pair Corralation between United Homes and Magna International
Considering the 90-day investment horizon United Homes Group is expected to under-perform the Magna International. In addition to that, United Homes is 2.22 times more volatile than Magna International. It trades about -0.02 of its total potential returns per unit of risk. Magna International is currently generating about -0.03 per unit of volatility. If you would invest 5,476 in Magna International on September 12, 2024 and sell it today you would lose (971.00) from holding Magna International or give up 17.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Homes Group vs. Magna International
Performance |
| Timeline |
| United Homes Group |
| Magna International |
United Homes and Magna International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Homes and Magna International
The main advantage of trading using opposite United Homes and Magna International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Homes position performs unexpectedly, Magna International 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 International will offset losses from the drop in Magna International's long position.| United Homes vs. Microbot Medical | United Homes vs. Hudson Pacific Properties | United Homes vs. Thai Beverage PCL | United Homes vs. Franklin Wireless Corp |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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