Correlation Between United Natural and MagnaChip Semiconductor
Can any of the company-specific risk be diversified away by investing in both United Natural 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 United Natural and MagnaChip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Natural Foods and MagnaChip Semiconductor Corp, you can compare the effects of market volatilities on United Natural 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 United Natural with a short position of MagnaChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and MagnaChip Semiconductor.
Diversification Opportunities for United Natural and MagnaChip Semiconductor
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and MagnaChip is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and MagnaChip Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and United Natural 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 United Natural Foods 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 United Natural i.e., United Natural and MagnaChip Semiconductor go up and down completely randomly.
Pair Corralation between United Natural and MagnaChip Semiconductor
Assuming the 90 days horizon United Natural Foods is expected to generate 1.48 times more return on investment than MagnaChip Semiconductor. However, United Natural is 1.48 times more volatile than MagnaChip Semiconductor Corp. It trades about 0.07 of its potential returns per unit of risk. MagnaChip Semiconductor Corp is currently generating about -0.05 per unit of risk. If you would invest 1,397 in United Natural Foods on September 2, 2024 and sell it today you would earn a total of 893.00 from holding United Natural Foods or generate 63.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Natural Foods vs. MagnaChip Semiconductor Corp
Performance |
| Timeline |
| United Natural Foods |
| MagnaChip Semiconductor |
United Natural and MagnaChip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and MagnaChip Semiconductor
The main advantage of trading using opposite United Natural and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural 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.| United Natural vs. STRAYER EDUCATION | United Natural vs. PSI Software AG | United Natural vs. Strategic Education | United Natural vs. ATOSS SOFTWARE |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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