Correlation Between Adient PLC and Magna International

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

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

Diversification Opportunities for Adient PLC and Magna International

-0.07

Correlation Coefficient

Adient PLC  Magna International

Good diversification

The 3 months correlation between Adient and Magna is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Adient PLC and Magna International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna International and Adient PLC 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 Adient PLC are associated (or correlated) with Magna International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magna International has no effect on the direction of Adient PLC i.e., Adient PLC and Magna International go up and down completely randomly.

Pair Corralation between Adient PLC and Magna International

Given the investment horizon of 90 days Adient PLC is expected to under-perform the Magna International. In addition to that, Adient PLC is 1.16 times more volatile than Magna International. It trades about -0.07 of its total potential returns per unit of risk. Magna International is currently generating about 0.05 per unit of volatility. If you would invest  4,210  in Magna International on August 23, 2024 and sell it today you would earn a total of  204.00  from holding Magna International or generate 4.85% return on investment over 90 days.

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

Adient PLC  vs.  Magna International

Adient PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adient PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Magna International

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Magna International are ranked lower than 3 (%) 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 recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Adient PLC and Magna International

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

The idea behind Adient PLC and Magna 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 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.