Correlation Between FORWARD AIR and MagnaChip Semiconductor
Can any of the company-specific risk be diversified away by investing in both FORWARD AIR and MagnaChip Semiconductor 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 FORWARD AIR and MagnaChip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FORWARD AIR P and MagnaChip Semiconductor Corp, you can compare the effects of market volatilities on FORWARD AIR and MagnaChip Semiconductor 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 FORWARD AIR with a short position of MagnaChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of FORWARD AIR and MagnaChip Semiconductor.
Diversification Opportunities for FORWARD AIR and MagnaChip Semiconductor
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between FORWARD and MagnaChip is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding FORWARD AIR P and MagnaChip Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and FORWARD AIR 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 FORWARD AIR P are associated (or correlated) with MagnaChip Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MagnaChip Semiconductor has no effect on the direction of FORWARD AIR i.e., FORWARD AIR and MagnaChip Semiconductor go up and down completely randomly.
Pair Corralation between FORWARD AIR and MagnaChip Semiconductor
Assuming the 90 days horizon FORWARD AIR P is expected to generate 1.43 times more return on investment than MagnaChip Semiconductor. However, FORWARD AIR is 1.43 times more volatile than MagnaChip Semiconductor Corp. It trades about 0.0 of its potential returns per unit of risk. MagnaChip Semiconductor Corp is currently generating about -0.09 per unit of risk. If you would invest 3,200 in FORWARD AIR P on November 5, 2024 and sell it today you would lose (20.00) from holding FORWARD AIR P or give up 0.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FORWARD AIR P vs. MagnaChip Semiconductor Corp
Performance |
| Timeline |
| FORWARD AIR P |
| MagnaChip Semiconductor |
FORWARD AIR and MagnaChip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FORWARD AIR and MagnaChip Semiconductor
The main advantage of trading using opposite FORWARD AIR and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FORWARD AIR position performs unexpectedly, MagnaChip Semiconductor 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 MagnaChip Semiconductor will offset losses from the drop in MagnaChip Semiconductor's long position.| FORWARD AIR vs. MGIC INVESTMENT | FORWARD AIR vs. Corsair Gaming | FORWARD AIR vs. Altair Engineering | FORWARD AIR vs. RYANAIR HLDGS ADR |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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