Correlation Between Ituran Location and MagnaChip Semiconductor
Can any of the company-specific risk be diversified away by investing in both Ituran Location 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 Ituran Location and MagnaChip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ituran Location and and MagnaChip Semiconductor, you can compare the effects of market volatilities on Ituran Location 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 Ituran Location with a short position of MagnaChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ituran Location and MagnaChip Semiconductor.
Diversification Opportunities for Ituran Location and MagnaChip Semiconductor
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ituran and MagnaChip is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Ituran Location and and MagnaChip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and Ituran Location 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 Ituran Location and 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 Ituran Location i.e., Ituran Location and MagnaChip Semiconductor go up and down completely randomly.
Pair Corralation between Ituran Location and MagnaChip Semiconductor
Given the investment horizon of 90 days Ituran Location is expected to generate 1.01 times less return on investment than MagnaChip Semiconductor. But when comparing it to its historical volatility, Ituran Location and is 1.89 times less risky than MagnaChip Semiconductor. It trades about 0.42 of its potential returns per unit of risk. MagnaChip Semiconductor is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 382.00 in MagnaChip Semiconductor on September 3, 2024 and sell it today you would earn a total of 50.00 from holding MagnaChip Semiconductor or generate 13.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ituran Location and vs. MagnaChip Semiconductor
Performance |
| Timeline |
| Ituran Location |
| MagnaChip Semiconductor |
Ituran Location and MagnaChip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ituran Location and MagnaChip Semiconductor
The main advantage of trading using opposite Ituran Location and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ituran Location 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.| Ituran Location vs. Silicom | Ituran Location vs. Allot Communications | Ituran Location vs. Sapiens International | Ituran Location vs. Formula Systems 1985 |
| MagnaChip Semiconductor vs. CEVA Inc | MagnaChip Semiconductor vs. MACOM Technology Solutions | MagnaChip Semiconductor vs. FormFactor | MagnaChip Semiconductor vs. MaxLinear |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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