Correlation Between Magnite and CuriosityStream

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

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

Diversification Opportunities for Magnite and CuriosityStream

-0.43

Correlation Coefficient

Magnite  CuriosityStream

Very good diversification

The 3 months correlation between Magnite and CuriosityStream is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Magnite and CuriosityStream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CuriosityStream 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 CuriosityStream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CuriosityStream has no effect on the direction of Magnite i.e., Magnite and CuriosityStream go up and down completely randomly.

Pair Corralation between Magnite and CuriosityStream

Given the investment horizon of 90 days Magnite is expected to under-perform the CuriosityStream. But the stock apears to be less risky and, when comparing its historical volatility, Magnite is 6.9 times less risky than CuriosityStream. The stock trades about -0.02 of its potential returns per unit of risk. The CuriosityStream is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2.63  in CuriosityStream on October 6, 2024 and sell it today you would lose (0.03) from holding CuriosityStream or give up 1.14% of portfolio value over 90 days.

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

Magnite  vs.  CuriosityStream

Magnite

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Magnite are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Magnite demonstrated solid returns over the last few months and may actually be approaching a breakup point.

CuriosityStream

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CuriosityStream are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal forward indicators, CuriosityStream showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Magnite and CuriosityStream

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

The idea behind Magnite and CuriosityStream 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.