Correlation Between Magna International and CROWN

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

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

Diversification Opportunities for Magna International and CROWN

-0.43

Correlation Coefficient

Magna International  CROWN

Very good diversification

The 3 months correlation between Magna and CROWN is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Magna International and CROWN CASTLE INTERNATIONAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CROWN CASTLE INTERNA 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 CROWN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CROWN CASTLE INTERNA has no effect on the direction of Magna International i.e., Magna International and CROWN go up and down completely randomly.

Pair Corralation between Magna International and CROWN

Considering the 90-day investment horizon Magna International is expected to under-perform the CROWN. But the stock apears to be less risky and, when comparing its historical volatility, Magna International is 33.87 times less risky than CROWN. The stock trades about 0.0 of its potential returns per unit of risk. The CROWN CASTLE INTERNATIONAL is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  6,668  in CROWN CASTLE INTERNATIONAL on September 14, 2024 and sell it today you would earn a total of  179.00  from holding CROWN CASTLE INTERNATIONAL or generate 2.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	83.81%
Values	Daily Returns

Magna International  vs.  CROWN CASTLE INTERNATIONAL

Magna International

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Magna International are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, Magna International sustained solid returns over the last few months and may actually be approaching a breakup point.

CROWN CASTLE INTERNA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CROWN CASTLE INTERNATIONAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for CROWN CASTLE INTERNATIONAL investors.

Pair Trading with Magna International and CROWN

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

The idea behind Magna International and CROWN CASTLE 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.