Correlation Between MagnaChip Semiconductor and Silicon Laboratories
Can any of the company-specific risk be diversified away by investing in both MagnaChip Semiconductor and Silicon Laboratories 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 MagnaChip Semiconductor and Silicon Laboratories into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MagnaChip Semiconductor and Silicon Laboratories, you can compare the effects of market volatilities on MagnaChip Semiconductor and Silicon Laboratories 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 MagnaChip Semiconductor with a short position of Silicon Laboratories. Check out your portfolio center. Please also check ongoing floating volatility patterns of MagnaChip Semiconductor and Silicon Laboratories.
Diversification Opportunities for MagnaChip Semiconductor and Silicon Laboratories
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MagnaChip and Silicon is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding MagnaChip Semiconductor and Silicon Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silicon Laboratories and MagnaChip Semiconductor 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 MagnaChip Semiconductor are associated (or correlated) with Silicon Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silicon Laboratories has no effect on the direction of MagnaChip Semiconductor i.e., MagnaChip Semiconductor and Silicon Laboratories go up and down completely randomly.
Pair Corralation between MagnaChip Semiconductor and Silicon Laboratories
Allowing for the 90-day total investment horizon MagnaChip Semiconductor is expected to under-perform the Silicon Laboratories. But the stock apears to be less risky and, when comparing its historical volatility, MagnaChip Semiconductor is 1.14 times less risky than Silicon Laboratories. The stock trades about -0.07 of its potential returns per unit of risk. The Silicon Laboratories is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 18,875 in Silicon Laboratories on November 2, 2024 and sell it today you would lose (5,305) from holding Silicon Laboratories or give up 28.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MagnaChip Semiconductor vs. Silicon Laboratories
Performance |
| Timeline |
| MagnaChip Semiconductor |
| Silicon Laboratories |
MagnaChip Semiconductor and Silicon Laboratories Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MagnaChip Semiconductor and Silicon Laboratories
The main advantage of trading using opposite MagnaChip Semiconductor and Silicon Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MagnaChip Semiconductor position performs unexpectedly, Silicon Laboratories 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 Silicon Laboratories will offset losses from the drop in Silicon Laboratories' long position.| MagnaChip Semiconductor vs. CEVA Inc | MagnaChip Semiconductor vs. MACOM Technology Solutions | MagnaChip Semiconductor vs. FormFactor | MagnaChip Semiconductor vs. MaxLinear |
| Silicon Laboratories vs. Diodes Incorporated | Silicon Laboratories vs. MACOM Technology Solutions | Silicon Laboratories vs. FormFactor | Silicon Laboratories vs. Amkor Technology |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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