Correlation Between Magna International and Autoliv
Can any of the company-specific risk be diversified away by investing in both Magna International and Autoliv 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 Magna International and Autoliv into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magna International and Autoliv, you can compare the effects of market volatilities on Magna International and Autoliv 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 Magna International with a short position of Autoliv. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magna International and Autoliv.
Diversification Opportunities for Magna International and Autoliv
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Magna and Autoliv is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Magna International and Autoliv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autoliv and Magna International 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 Magna International are associated (or correlated) with Autoliv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autoliv has no effect on the direction of Magna International i.e., Magna International and Autoliv go up and down completely randomly.
Pair Corralation between Magna International and Autoliv
Considering the 90-day investment horizon Magna International is expected to under-perform the Autoliv. In addition to that, Magna International is 1.44 times more volatile than Autoliv. It trades about -0.11 of its total potential returns per unit of risk. Autoliv is currently generating about 0.11 per unit of volatility. If you would invest 11,221 in Autoliv on January 26, 2024 and sell it today you would earn a total of 573.00 from holding Autoliv or generate 5.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magna International vs. Autoliv
Performance |
| Timeline |
| Magna International |
| Autoliv |
Magna International and Autoliv Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magna International and Autoliv
The main advantage of trading using opposite Magna International and Autoliv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna International position performs unexpectedly, Autoliv 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 Autoliv will offset losses from the drop in Autoliv's long position.| Magna International vs. Fox Factory Holding | Magna International vs. Douglas Dynamics | Magna International vs. Monro Muffler Brake |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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