Correlation Between NextTrip and Magna International
Can any of the company-specific risk be diversified away by investing in both NextTrip and Magna 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 NextTrip and Magna International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NextTrip and Magna International, you can compare the effects of market volatilities on NextTrip and Magna 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 NextTrip with a short position of Magna International. Check out your portfolio center. Please also check ongoing floating volatility patterns of NextTrip and Magna International.
Diversification Opportunities for NextTrip and Magna International
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NextTrip and Magna is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding NextTrip and Magna International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna International and NextTrip 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 NextTrip are associated (or correlated) with Magna International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magna International has no effect on the direction of NextTrip i.e., NextTrip and Magna International go up and down completely randomly.
Pair Corralation between NextTrip and Magna International
Given the investment horizon of 90 days NextTrip is expected to generate 4.99 times more return on investment than Magna International. However, NextTrip is 4.99 times more volatile than Magna International. It trades about 0.04 of its potential returns per unit of risk. Magna International is currently generating about -0.21 per unit of risk. If you would invest 331.00 in NextTrip on December 3, 2024 and sell it today you would earn a total of 3.00 from holding NextTrip or generate 0.91% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
NextTrip vs. Magna International
Performance |
Timeline |
NextTrip |
Magna International |
NextTrip and Magna International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NextTrip and Magna International
The main advantage of trading using opposite NextTrip and Magna International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NextTrip position performs unexpectedly, Magna 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 Magna International will offset losses from the drop in Magna International's long position.NextTrip vs. NFT Limited | NextTrip vs. Vacasa Inc | NextTrip vs. Enlivex Therapeutics | NextTrip vs. Wisekey International Holding |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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