Correlation Between Sonida Senior and MagnaChip Semiconductor
Can any of the company-specific risk be diversified away by investing in both Sonida Senior 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 Sonida Senior and MagnaChip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonida Senior Living and MagnaChip Semiconductor, you can compare the effects of market volatilities on Sonida Senior 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 Sonida Senior with a short position of MagnaChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonida Senior and MagnaChip Semiconductor.
Diversification Opportunities for Sonida Senior and MagnaChip Semiconductor
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sonida and MagnaChip is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and MagnaChip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and Sonida Senior 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 Sonida Senior Living 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 Sonida Senior i.e., Sonida Senior and MagnaChip Semiconductor go up and down completely randomly.
Pair Corralation between Sonida Senior and MagnaChip Semiconductor
Given the investment horizon of 90 days Sonida Senior Living is expected to generate 2.06 times more return on investment than MagnaChip Semiconductor. However, Sonida Senior is 2.06 times more volatile than MagnaChip Semiconductor. It trades about 0.05 of its potential returns per unit of risk. MagnaChip Semiconductor is currently generating about -0.05 per unit of risk. If you would invest 1,416 in Sonida Senior Living on September 4, 2024 and sell it today you would earn a total of 1,146 from holding Sonida Senior Living or generate 80.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Sonida Senior Living vs. MagnaChip Semiconductor
Performance |
| Timeline |
| Sonida Senior Living |
| MagnaChip Semiconductor |
Sonida Senior and MagnaChip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonida Senior and MagnaChip Semiconductor
The main advantage of trading using opposite Sonida Senior and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonida Senior 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.| Sonida Senior vs. Baxter International | Sonida Senior vs. West Pharmaceutical Services | Sonida Senior vs. ResMed Inc | Sonida Senior vs. The Cooper Companies, |
| 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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