Correlation Between Magnite and Tremor International

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

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

Diversification Opportunities for Magnite and Tremor International

0.61

Correlation Coefficient

Magnite  Tremor International

Poor diversification

The 3 months correlation between Magnite and Tremor is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Magnite and Tremor International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tremor International 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 Tremor International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tremor International has no effect on the direction of Magnite i.e., Magnite and Tremor International go up and down completely randomly.

Pair Corralation between Magnite and Tremor International

Given the investment horizon of 90 days Magnite is expected to under-perform the Tremor International. In addition to that, Magnite is 1.38 times more volatile than Tremor International. It trades about -0.03 of its total potential returns per unit of risk. Tremor International is currently generating about 0.27 per unit of volatility. If you would invest  490.00  in Tremor International on October 11, 2024 and sell it today you would earn a total of  50.00  from holding Tremor International or generate 10.2% return on investment over 90 days.

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

Magnite  vs.  Tremor International

Magnite

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Magnite are ranked lower than 12 (%) 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.

Tremor International

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tremor International are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Tremor International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Magnite and Tremor International

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

The idea behind Magnite and Tremor International 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.