Correlation Between NEWELL RUBBERMAID and Magnachip Semiconductor
Can any of the company-specific risk be diversified away by investing in both NEWELL RUBBERMAID 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 NEWELL RUBBERMAID and Magnachip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEWELL RUBBERMAID and Magnachip Semiconductor, you can compare the effects of market volatilities on NEWELL RUBBERMAID 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 NEWELL RUBBERMAID with a short position of Magnachip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEWELL RUBBERMAID and Magnachip Semiconductor.
Diversification Opportunities for NEWELL RUBBERMAID and Magnachip Semiconductor
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NEWELL and Magnachip is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding NEWELL RUBBERMAID and Magnachip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnachip Semiconductor and NEWELL RUBBERMAID 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 NEWELL RUBBERMAID 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 NEWELL RUBBERMAID i.e., NEWELL RUBBERMAID and Magnachip Semiconductor go up and down completely randomly.
Pair Corralation between NEWELL RUBBERMAID and Magnachip Semiconductor
Assuming the 90 days trading horizon NEWELL RUBBERMAID is expected to generate 1.52 times more return on investment than Magnachip Semiconductor. However, NEWELL RUBBERMAID is 1.52 times more volatile than Magnachip Semiconductor. It trades about 0.08 of its potential returns per unit of risk. Magnachip Semiconductor is currently generating about -0.02 per unit of risk. If you would invest 634.00 in NEWELL RUBBERMAID on October 13, 2024 and sell it today you would earn a total of 314.00 from holding NEWELL RUBBERMAID or generate 49.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NEWELL RUBBERMAID vs. Magnachip Semiconductor
Performance |
| Timeline |
| NEWELL RUBBERMAID |
| Magnachip Semiconductor |
NEWELL RUBBERMAID and Magnachip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEWELL RUBBERMAID and Magnachip Semiconductor
The main advantage of trading using opposite NEWELL RUBBERMAID and Magnachip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEWELL RUBBERMAID 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.| NEWELL RUBBERMAID vs. MCEWEN MINING INC | NEWELL RUBBERMAID vs. Addtech AB | NEWELL RUBBERMAID vs. Sunny Optical Technology | NEWELL RUBBERMAID vs. THORNEY TECHS LTD |
| Magnachip Semiconductor vs. NEWELL RUBBERMAID | Magnachip Semiconductor vs. Vulcan Materials | Magnachip Semiconductor vs. The Boston Beer | Magnachip Semiconductor vs. Tsingtao Brewery |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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