Correlation Between NORTHEAST UTILITIES and Magnachip Semiconductor
Can any of the company-specific risk be diversified away by investing in both NORTHEAST UTILITIES 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 NORTHEAST UTILITIES and Magnachip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NORTHEAST UTILITIES and Magnachip Semiconductor, you can compare the effects of market volatilities on NORTHEAST UTILITIES 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 NORTHEAST UTILITIES with a short position of Magnachip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORTHEAST UTILITIES and Magnachip Semiconductor.
Diversification Opportunities for NORTHEAST UTILITIES and Magnachip Semiconductor
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NORTHEAST and Magnachip is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding NORTHEAST UTILITIES and Magnachip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnachip Semiconductor and NORTHEAST UTILITIES 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 NORTHEAST UTILITIES 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 NORTHEAST UTILITIES i.e., NORTHEAST UTILITIES and Magnachip Semiconductor go up and down completely randomly.
Pair Corralation between NORTHEAST UTILITIES and Magnachip Semiconductor
Assuming the 90 days trading horizon NORTHEAST UTILITIES is expected to generate 0.56 times more return on investment than Magnachip Semiconductor. However, NORTHEAST UTILITIES is 1.79 times less risky than Magnachip Semiconductor. It trades about -0.02 of its potential returns per unit of risk. Magnachip Semiconductor is currently generating about -0.04 per unit of risk. If you would invest 6,829 in NORTHEAST UTILITIES on November 9, 2024 and sell it today you would lose (1,179) from holding NORTHEAST UTILITIES or give up 17.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NORTHEAST UTILITIES vs. Magnachip Semiconductor
Performance |
| Timeline |
| NORTHEAST UTILITIES |
| Magnachip Semiconductor |
NORTHEAST UTILITIES and Magnachip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NORTHEAST UTILITIES and Magnachip Semiconductor
The main advantage of trading using opposite NORTHEAST UTILITIES and Magnachip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORTHEAST UTILITIES 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.| NORTHEAST UTILITIES vs. SALESFORCE INC CDR | NORTHEAST UTILITIES vs. TRADELINK ELECTRON | NORTHEAST UTILITIES vs. PKSHA TECHNOLOGY INC | NORTHEAST UTILITIES vs. MARKET VECTR RETAIL |
| Magnachip Semiconductor vs. MONEYSUPERMARKET | Magnachip Semiconductor vs. BG Foods | Magnachip Semiconductor vs. American Eagle Outfitters | Magnachip Semiconductor vs. PREMIER FOODS |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |