Correlation Between Magna International and 62954WAC9

Can any of the company-specific risk be diversified away by investing in both Magna International and 62954WAC9 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 62954WAC9 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Magna International and NTT 1162 03 APR 26, you can compare the effects of market volatilities on Magna International and 62954WAC9 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 62954WAC9. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magna International and 62954WAC9.

Diversification Opportunities for Magna International and 62954WAC9

-0.57

Correlation Coefficient

Magna International  62954WAC9

Excellent diversification

The 3 months correlation between Magna and 62954WAC9 is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Magna International and NTT 1162 03 APR 26 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTT 1162 03 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 62954WAC9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTT 1162 03 has no effect on the direction of Magna International i.e., Magna International and 62954WAC9 go up and down completely randomly.

Pair Corralation between Magna International and 62954WAC9

Considering the 90-day investment horizon Magna International is expected to under-perform the 62954WAC9. In addition to that, Magna International is 3.25 times more volatile than NTT 1162 03 APR 26. It trades about -0.22 of its total potential returns per unit of risk. NTT 1162 03 APR 26 is currently generating about -0.01 per unit of volatility. If you would invest  9,565  in NTT 1162 03 APR 26 on December 5, 2024 and sell it today you would lose (32.00) from holding NTT 1162 03 APR 26 or give up 0.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	74.58%
Values	Daily Returns

Magna International  vs.  NTT 1162 03 APR 26

Magna International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Magna International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

NTT 1162 03

Risk-Adjusted Performance

Very Weak

Over the last 90 days NTT 1162 03 APR 26 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 62954WAC9 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Magna International and 62954WAC9

The main advantage of trading using opposite Magna International and 62954WAC9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna International position performs unexpectedly, 62954WAC9 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 62954WAC9 will offset losses from the drop in 62954WAC9's long position.

The idea behind Magna International and NTT 1162 03 APR 26 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.