Correlation Between INFORMATION SVC and MAGNA INTL
Can any of the company-specific risk be diversified away by investing in both INFORMATION SVC 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 INFORMATION SVC and MAGNA INTL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INFORMATION SVC GRP and MAGNA INTL, you can compare the effects of market volatilities on INFORMATION SVC 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 INFORMATION SVC with a short position of MAGNA INTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of INFORMATION SVC and MAGNA INTL.
Diversification Opportunities for INFORMATION SVC and MAGNA INTL
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between INFORMATION and MAGNA is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding INFORMATION SVC GRP and MAGNA INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAGNA INTL and INFORMATION SVC 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 INFORMATION SVC GRP 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 INFORMATION SVC i.e., INFORMATION SVC and MAGNA INTL go up and down completely randomly.
Pair Corralation between INFORMATION SVC and MAGNA INTL
Assuming the 90 days horizon INFORMATION SVC GRP is expected to under-perform the MAGNA INTL. In addition to that, INFORMATION SVC is 1.15 times more volatile than MAGNA INTL. It trades about -0.01 of its total potential returns per unit of risk. MAGNA INTL is currently generating about -0.01 per unit of volatility. If you would invest 5,150 in MAGNA INTL on September 5, 2024 and sell it today you would lose (852.00) from holding MAGNA INTL or give up 16.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
INFORMATION SVC GRP vs. MAGNA INTL
Performance |
| Timeline |
| INFORMATION SVC GRP |
| MAGNA INTL |
INFORMATION SVC and MAGNA INTL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INFORMATION SVC and MAGNA INTL
The main advantage of trading using opposite INFORMATION SVC and MAGNA INTL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INFORMATION SVC 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.| INFORMATION SVC vs. TOTAL GABON | INFORMATION SVC vs. Walgreens Boots Alliance | INFORMATION SVC vs. Peak Resources Limited |
| MAGNA INTL vs. Datadog | MAGNA INTL vs. DATANG INTL POW | MAGNA INTL vs. Pure Storage | MAGNA INTL vs. INFORMATION SVC GRP |
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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