Correlation Between Magna International and NuRAN Wireless

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

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

Diversification Opportunities for Magna International and NuRAN Wireless

-0.54

Correlation Coefficient

Magna International  NuRAN Wireless

Excellent diversification

The 3 months correlation between Magna and NuRAN is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Magna International and NuRAN Wireless in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NuRAN Wireless 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 NuRAN Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NuRAN Wireless has no effect on the direction of Magna International i.e., Magna International and NuRAN Wireless go up and down completely randomly.

Pair Corralation between Magna International and NuRAN Wireless

Considering the 90-day investment horizon Magna International is expected to generate 0.58 times more return on investment than NuRAN Wireless. However, Magna International is 1.74 times less risky than NuRAN Wireless. It trades about -0.27 of its potential returns per unit of risk. NuRAN Wireless is currently generating about -0.27 per unit of risk. If you would invest  4,646  in Magna International on September 24, 2024 and sell it today you would lose (424.00) from holding Magna International or give up 9.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Magna International  vs.  NuRAN Wireless

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 current stock price disturbance, may contribute to short-term losses for the investors.

NuRAN Wireless

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NuRAN Wireless 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.

Pair Trading with Magna International and NuRAN Wireless

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

The idea behind Magna International and NuRAN Wireless 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.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.