Correlation Between US FOODS and MagnaChip Semiconductor
Can any of the company-specific risk be diversified away by investing in both US FOODS 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 US FOODS and MagnaChip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US FOODS HOLDING and MagnaChip Semiconductor Corp, you can compare the effects of market volatilities on US FOODS 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 US FOODS with a short position of MagnaChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of US FOODS and MagnaChip Semiconductor.
Diversification Opportunities for US FOODS and MagnaChip Semiconductor
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between UFH and MagnaChip is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding US FOODS HOLDING and MagnaChip Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and US FOODS 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 US FOODS HOLDING 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 US FOODS i.e., US FOODS and MagnaChip Semiconductor go up and down completely randomly.
Pair Corralation between US FOODS and MagnaChip Semiconductor
Assuming the 90 days trading horizon US FOODS is expected to generate 1.43 times less return on investment than MagnaChip Semiconductor. But when comparing it to its historical volatility, US FOODS HOLDING is 3.17 times less risky than MagnaChip Semiconductor. It trades about 0.31 of its potential returns per unit of risk. MagnaChip Semiconductor Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 396.00 in MagnaChip Semiconductor Corp on November 8, 2024 and sell it today you would earn a total of 36.00 from holding MagnaChip Semiconductor Corp or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
US FOODS HOLDING vs. MagnaChip Semiconductor Corp
Performance |
| Timeline |
| US FOODS HOLDING |
| MagnaChip Semiconductor |
US FOODS and MagnaChip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US FOODS and MagnaChip Semiconductor
The main advantage of trading using opposite US FOODS and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US FOODS 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.| US FOODS vs. ON SEMICONDUCTOR | US FOODS vs. ADRIATIC METALS LS 013355 | US FOODS vs. BE Semiconductor Industries | US FOODS vs. DAIDO METAL TD |
| MagnaChip Semiconductor vs. AEGEAN AIRLINES | MagnaChip Semiconductor vs. Nok Airlines PCL | MagnaChip Semiconductor vs. Direct Line Insurance | MagnaChip Semiconductor vs. Erste Group Bank |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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