Correlation Between Magnera Corp and IT Tech

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

By analyzing existing cross correlation between Magnera Corp placeholder and IT Tech Packaging, you can compare the effects of market volatilities on Magnera Corp and IT Tech 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 Magnera Corp with a short position of IT Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnera Corp and IT Tech.

Diversification Opportunities for Magnera Corp and IT Tech

-0.22

Correlation Coefficient

Magnera Corp  IT Tech

Very good diversification

The 3 months correlation between Magnera and ITP is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Magnera Corp placeholder and IT Tech Packaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IT Tech Packaging and Magnera Corp 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 Magnera Corp placeholder are associated (or correlated) with IT Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IT Tech Packaging has no effect on the direction of Magnera Corp i.e., Magnera Corp and IT Tech go up and down completely randomly.

Pair Corralation between Magnera Corp and IT Tech

Given the investment horizon of 90 days Magnera Corp is expected to generate 14.49 times less return on investment than IT Tech. But when comparing it to its historical volatility, Magnera Corp placeholder is 6.74 times less risky than IT Tech. It trades about 0.03 of its potential returns per unit of risk. IT Tech Packaging is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  27.00  in IT Tech Packaging on December 27, 2024 and sell it today you would earn a total of  0.00  from holding IT Tech Packaging or generate 0.0% return on investment over 90 days.

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

Magnera Corp placeholder  vs.  IT Tech Packaging

Magnera Corp placeholder

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Magnera Corp placeholder are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Magnera Corp is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

IT Tech Packaging

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in IT Tech Packaging are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, IT Tech reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Magnera Corp and IT Tech

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

The idea behind Magnera Corp placeholder and IT Tech Packaging 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.