Correlation Between Magnite and U Haul

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

By analyzing existing cross correlation between Magnite and U Haul Holding, you can compare the effects of market volatilities on Magnite and U Haul 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 Magnite with a short position of U Haul. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnite and U Haul.

Diversification Opportunities for Magnite and U Haul

-0.59

Correlation Coefficient

Magnite  U Haul

Excellent diversification

The 3 months correlation between Magnite and UHAL-B is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Magnite and U Haul Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on U Haul Holding and Magnite 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 Magnite are associated (or correlated) with U Haul. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of U Haul Holding has no effect on the direction of Magnite i.e., Magnite and U Haul go up and down completely randomly.

Pair Corralation between Magnite and U Haul

Given the investment horizon of 90 days Magnite is expected to generate 2.19 times more return on investment than U Haul. However, Magnite is 2.19 times more volatile than U Haul Holding. It trades about 0.09 of its potential returns per unit of risk. U Haul Holding is currently generating about -0.03 per unit of risk. If you would invest  1,403  in Magnite on September 14, 2024 and sell it today you would earn a total of  241.00  from holding Magnite or generate 17.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Magnite  vs.  U Haul Holding

Magnite

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Magnite are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Magnite demonstrated solid returns over the last few months and may actually be approaching a breakup point.

U Haul Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days U Haul Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, U Haul is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Magnite and U Haul

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

The idea behind Magnite and U Haul Holding 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.