Correlation Between HomeToGo and MAGNUM DCORP
Can any of the company-specific risk be diversified away by investing in both HomeToGo and MAGNUM DCORP 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 HomeToGo and MAGNUM DCORP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HomeToGo SE and MAGNUM DCORP INC, you can compare the effects of market volatilities on HomeToGo and MAGNUM DCORP 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 HomeToGo with a short position of MAGNUM DCORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of HomeToGo and MAGNUM DCORP.
Diversification Opportunities for HomeToGo and MAGNUM DCORP
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HomeToGo and MAGNUM is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding HomeToGo SE and MAGNUM DCORP INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAGNUM DCORP INC and HomeToGo 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 HomeToGo SE are associated (or correlated) with MAGNUM DCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAGNUM DCORP INC has no effect on the direction of HomeToGo i.e., HomeToGo and MAGNUM DCORP go up and down completely randomly.
Pair Corralation between HomeToGo and MAGNUM DCORP
Assuming the 90 days trading horizon HomeToGo is expected to generate 206.87 times less return on investment than MAGNUM DCORP. But when comparing it to its historical volatility, HomeToGo SE is 34.91 times less risky than MAGNUM DCORP. It trades about 0.03 of its potential returns per unit of risk. MAGNUM DCORP INC is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 2.00 in MAGNUM DCORP INC on September 27, 2024 and sell it today you would earn a total of 1.89 from holding MAGNUM DCORP INC or generate 94.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
HomeToGo SE vs. MAGNUM DCORP INC
Performance |
Timeline |
HomeToGo SE |
MAGNUM DCORP INC |
HomeToGo and MAGNUM DCORP Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with HomeToGo and MAGNUM DCORP
The main advantage of trading using opposite HomeToGo and MAGNUM DCORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HomeToGo position performs unexpectedly, MAGNUM DCORP 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 MAGNUM DCORP will offset losses from the drop in MAGNUM DCORP's long position.HomeToGo vs. Alphabet Class A | ||
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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