Correlation Between OZ Minerals and Magna International

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

By analyzing existing cross correlation between OZ Minerals Limited and Magna International, you can compare the effects of market volatilities on OZ Minerals 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 OZ Minerals with a short position of Magna International. Check out your portfolio center. Please also check ongoing floating volatility patterns of OZ Minerals and Magna International.

Diversification Opportunities for OZ Minerals and Magna International

0.24

Correlation Coefficient

OZ Minerals  Magna International

Modest diversification

The 3 months correlation between OZMLF and Magna is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding OZ Minerals Limited and Magna International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna International and OZ Minerals 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 OZ Minerals Limited 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 OZ Minerals i.e., OZ Minerals and Magna International go up and down completely randomly.

Pair Corralation between OZ Minerals and Magna International

If you would invest  1,900  in OZ Minerals Limited on September 20, 2024 and sell it today you would earn a total of  0.00  from holding OZ Minerals Limited or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.76%
Values	Daily Returns

OZ Minerals Limited  vs.  Magna International

OZ Minerals Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OZ Minerals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, OZ Minerals is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Magna International

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Magna International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Magna International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with OZ Minerals and Magna International

The main advantage of trading using opposite OZ Minerals and Magna International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OZ Minerals 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.

The idea behind OZ Minerals Limited and Magna 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.

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 Equity Valuation module to check real value of public entities based on technical and fundamental data.