Correlation Between Dno ASA and Magna International
Can any of the company-specific risk be diversified away by investing in both Dno ASA 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 Dno ASA and Magna International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dno ASA and Magna International, you can compare the effects of market volatilities on Dno ASA 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 Dno ASA with a short position of Magna International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dno ASA and Magna International.
Diversification Opportunities for Dno ASA and Magna International
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dno and Magna is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Dno ASA and Magna International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna International and Dno ASA 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 Dno ASA 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 Dno ASA i.e., Dno ASA and Magna International go up and down completely randomly.
Pair Corralation between Dno ASA and Magna International
Assuming the 90 days horizon Dno ASA is expected to generate 0.94 times more return on investment than Magna International. However, Dno ASA is 1.06 times less risky than Magna International. It trades about -0.09 of its potential returns per unit of risk. Magna International is currently generating about -0.14 per unit of risk. If you would invest 1,336 in Dno ASA on December 2, 2024 and sell it today you would lose (103.00) from holding Dno ASA or give up 7.71% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Dno ASA vs. Magna International
Performance |
Timeline |
Dno ASA |
Magna International |
Dno ASA and Magna International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dno ASA and Magna International
The main advantage of trading using opposite Dno ASA and Magna International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dno ASA 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.Dno ASA vs. REINET INVESTMENTS SCA | Dno ASA vs. JLF INVESTMENT | Dno ASA vs. Scottish Mortgage Investment | Dno ASA vs. Keck Seng Investments |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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