Correlation Between Magnite and Beneficient

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

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

Diversification Opportunities for Magnite and Beneficient

-0.76

Correlation Coefficient

Magnite  Beneficient

Pay attention - limited upside

The 3 months correlation between Magnite and Beneficient is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Magnite and Beneficient Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beneficient Class and Magnite 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 Magnite are associated (or correlated) with Beneficient. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beneficient Class has no effect on the direction of Magnite i.e., Magnite and Beneficient go up and down completely randomly.

Pair Corralation between Magnite and Beneficient

Given the investment horizon of 90 days Magnite is expected to generate 0.36 times more return on investment than Beneficient. However, Magnite is 2.75 times less risky than Beneficient. It trades about 0.09 of its potential returns per unit of risk. Beneficient Class A is currently generating about -0.03 per unit of risk. If you would invest  1,403  in Magnite on September 15, 2024 and sell it today you would earn a total of  244.00  from holding Magnite or generate 17.39% return on investment over 90 days.

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

Magnite  vs.  Beneficient Class A

Magnite

Risk-Adjusted Performance

7 of 100

OK

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

Beneficient Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beneficient Class A 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 Magnite and Beneficient

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

The idea behind Magnite and Beneficient Class A 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 Stocks Directory module to find actively traded stocks across global markets.