Correlation Between Magnite and PPL

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

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

Diversification Opportunities for Magnite and PPL

-0.08

Correlation Coefficient

Magnite  PPL

Good diversification

The 3 months correlation between Magnite and PPL is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Magnite and PPL Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPL Corporation 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 PPL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPL Corporation has no effect on the direction of Magnite i.e., Magnite and PPL go up and down completely randomly.

Pair Corralation between Magnite and PPL

Given the investment horizon of 90 days Magnite is expected to under-perform the PPL. In addition to that, Magnite is 3.13 times more volatile than PPL Corporation. It trades about -0.08 of its total potential returns per unit of risk. PPL Corporation is currently generating about 0.14 per unit of volatility. If you would invest  3,176  in PPL Corporation on December 19, 2024 and sell it today you would earn a total of  306.00  from holding PPL Corporation or generate 9.63% return on investment over 90 days.

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

Magnite  vs.  PPL Corp.

Magnite

Risk-Adjusted Performance

Very Weak

Over the last 90 days Magnite has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

PPL Corporation

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PPL Corporation are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, PPL may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Magnite and PPL

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

The idea behind Magnite and PPL Corporation 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.