Correlation Between Magna International and ZOOZ Power

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

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

Diversification Opportunities for Magna International and ZOOZ Power

0.72

Correlation Coefficient

Magna International  ZOOZ Power

Poor diversification

The 3 months correlation between Magna and ZOOZ is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Magna International and ZOOZ Power Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZOOZ Power 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 ZOOZ Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZOOZ Power has no effect on the direction of Magna International i.e., Magna International and ZOOZ Power go up and down completely randomly.

Pair Corralation between Magna International and ZOOZ Power

Considering the 90-day investment horizon Magna International is expected to generate 18.85 times less return on investment than ZOOZ Power. But when comparing it to its historical volatility, Magna International is 1.88 times less risky than ZOOZ Power. It trades about 0.02 of its potential returns per unit of risk. ZOOZ Power Ltd is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  180.00  in ZOOZ Power Ltd on September 21, 2024 and sell it today you would earn a total of  102.00  from holding ZOOZ Power Ltd or generate 56.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Magna International  vs.  ZOOZ Power Ltd

Magna International

Risk-Adjusted Performance

1 of 100

Very Weak

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.

ZOOZ Power

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ZOOZ Power Ltd are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, ZOOZ Power showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Magna International and ZOOZ Power

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

The idea behind Magna International and ZOOZ Power Ltd 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.