Correlation Between Magnite and Forsys Metals

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

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

Diversification Opportunities for Magnite and Forsys Metals

-0.24

Correlation Coefficient

Magnite  Forsys Metals

Very good diversification

The 3 months correlation between Magnite and Forsys is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Magnite and Forsys Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forsys Metals Corp 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 Forsys Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forsys Metals Corp has no effect on the direction of Magnite i.e., Magnite and Forsys Metals go up and down completely randomly.

Pair Corralation between Magnite and Forsys Metals

Given the investment horizon of 90 days Magnite is expected to generate 1.31 times more return on investment than Forsys Metals. However, Magnite is 1.31 times more volatile than Forsys Metals Corp. It trades about 0.12 of its potential returns per unit of risk. Forsys Metals Corp is currently generating about -0.2 per unit of risk. If you would invest  1,564  in Magnite on September 19, 2024 and sell it today you would earn a total of  93.00  from holding Magnite or generate 5.95% return on investment over 90 days.

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

Magnite  vs.  Forsys Metals Corp

Magnite

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Magnite are ranked lower than 9 (%) 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.

Forsys Metals Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Forsys Metals Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Forsys Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Magnite and Forsys Metals

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

The idea behind Magnite and Forsys Metals Corp 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.