Correlation Between United States and Magnite
Can any of the company-specific risk be diversified away by investing in both United States and Magnite 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 United States and Magnite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and Magnite, you can compare the effects of market volatilities on United States and Magnite 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 United States with a short position of Magnite. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Magnite.
Diversification Opportunities for United States and Magnite
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and Magnite is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Magnite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnite and United States 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 United States Steel are associated (or correlated) with Magnite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnite has no effect on the direction of United States i.e., United States and Magnite go up and down completely randomly.
Pair Corralation between United States and Magnite
Taking into account the 90-day investment horizon United States Steel is expected to generate 0.81 times more return on investment than Magnite. However, United States Steel is 1.24 times less risky than Magnite. It trades about 0.19 of its potential returns per unit of risk. Magnite is currently generating about -0.09 per unit of risk. If you would invest 3,110 in United States Steel on December 27, 2024 and sell it today you would earn a total of 1,186 from holding United States Steel or generate 38.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
United States Steel vs. Magnite
Performance |
Timeline |
United States Steel |
Magnite |
United States and Magnite Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United States and Magnite
The main advantage of trading using opposite United States and Magnite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States position performs unexpectedly, Magnite 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 Magnite will offset losses from the drop in Magnite's long position.United States vs. Nucor Corp | United States vs. Steel Dynamics | United States vs. ArcelorMittal SA ADR | United States vs. Gerdau SA ADR |
Magnite vs. Deluxe | Magnite vs. Clear Channel Outdoor | Magnite vs. Entravision Communications | Magnite vs. Criteo Sa |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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