Correlation Between Magna International and Service Team

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

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

Diversification Opportunities for Magna International and Service Team

0.0

Correlation Coefficient

Magna International  Service Team

Pay attention - limited upside

The 3 months correlation between Magna and Service is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Magna International and Service Team in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Service Team 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 Service Team. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Service Team has no effect on the direction of Magna International i.e., Magna International and Service Team go up and down completely randomly.

Pair Corralation between Magna International and Service Team

If you would invest  4,083  in Magna International on October 10, 2024 and sell it today you would earn a total of  99.00  from holding Magna International or generate 2.42% return on investment over 90 days.

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

Magna International  vs.  Service Team

Magna International

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Magna International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Service Team

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Service Team has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Service Team is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Magna International and Service Team

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

The idea behind Magna International and Service Team 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.