Correlation Between Beneficient and Magnite

Can any of the company-specific risk be diversified away by investing in both Beneficient and Magnite 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 Beneficient and Magnite into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Beneficient Class A and Magnite, you can compare the effects of market volatilities on Beneficient and Magnite 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 Beneficient with a short position of Magnite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beneficient and Magnite.

Diversification Opportunities for Beneficient and Magnite

-0.76

Correlation Coefficient

Beneficient  Magnite

Pay attention - limited upside

The 3 months correlation between Beneficient and Magnite is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Beneficient Class A and Magnite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnite and Beneficient 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 Beneficient Class A are associated (or correlated) with Magnite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnite has no effect on the direction of Beneficient i.e., Beneficient and Magnite go up and down completely randomly.

Pair Corralation between Beneficient and Magnite

Given the investment horizon of 90 days Beneficient Class A is expected to under-perform the Magnite. In addition to that, Beneficient is 3.69 times more volatile than Magnite. It trades about -0.05 of its total potential returns per unit of risk. Magnite is currently generating about 0.04 per unit of volatility. If you would invest  1,024  in Magnite on September 15, 2024 and sell it today you would earn a total of  623.00  from holding Magnite or generate 60.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Beneficient Class A  vs.  Magnite

Beneficient Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beneficient Class A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Magnite

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Magnite are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Magnite demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Beneficient and Magnite

The main advantage of trading using opposite Beneficient and Magnite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beneficient position performs unexpectedly, Magnite 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 Magnite will offset losses from the drop in Magnite's long position.

The idea behind Beneficient Class A and Magnite pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.