Correlation Between Magna International and Auddia

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

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

Diversification Opportunities for Magna International and Auddia

-0.35

Correlation Coefficient

Magna International  Auddia

Very good diversification

The 3 months correlation between Magna and Auddia is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Magna International and Auddia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auddia Inc and Magna International 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 Magna International are associated (or correlated) with Auddia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auddia Inc has no effect on the direction of Magna International i.e., Magna International and Auddia go up and down completely randomly.

Pair Corralation between Magna International and Auddia

Considering the 90-day investment horizon Magna International is expected to under-perform the Auddia. But the stock apears to be less risky and, when comparing its historical volatility, Magna International is 15.17 times less risky than Auddia. The stock trades about -0.17 of its potential returns per unit of risk. The Auddia Inc is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  1.80  in Auddia Inc on October 23, 2024 and sell it today you would earn a total of  1.63  from holding Auddia Inc or generate 90.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

Magna International  vs.  Auddia Inc

Magna International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Magna International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Magna International is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Auddia Inc

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with Magna International and Auddia

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

The idea behind Magna International and Auddia Inc 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 Commodity Directory module to find actively traded commodities issued by global exchanges.