Correlation Between Emerson Radio and Magnite
Can any of the company-specific risk be diversified away by investing in both Emerson Radio 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 Emerson Radio and Magnite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerson Radio and Magnite, you can compare the effects of market volatilities on Emerson Radio 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 Emerson Radio with a short position of Magnite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerson Radio and Magnite.
Diversification Opportunities for Emerson Radio and Magnite
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Emerson and Magnite is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Radio and Magnite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnite and Emerson Radio 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 Emerson Radio 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 Emerson Radio i.e., Emerson Radio and Magnite go up and down completely randomly.
Pair Corralation between Emerson Radio and Magnite
Considering the 90-day investment horizon Emerson Radio is expected to under-perform the Magnite. But the stock apears to be less risky and, when comparing its historical volatility, Emerson Radio is 1.05 times less risky than Magnite. The stock trades about -0.04 of its potential returns per unit of risk. The Magnite is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,403 in Magnite on September 15, 2024 and sell it today you would earn a total of 244.00 from holding Magnite or generate 17.39% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Emerson Radio vs. Magnite
Performance |
Timeline |
Emerson Radio |
Magnite |
Emerson Radio and Magnite Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Emerson Radio and Magnite
The main advantage of trading using opposite Emerson Radio and Magnite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerson Radio 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.Emerson Radio vs. LG Display Co | Emerson Radio vs. Sony Group Corp | Emerson Radio vs. Universal Electronics | Emerson Radio vs. VOXX International |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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