Correlation Between Westinghouse Air and Magnachip Semiconductor
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air 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 Westinghouse Air and Magnachip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westinghouse Air Brake and Magnachip Semiconductor, you can compare the effects of market volatilities on Westinghouse Air 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 Westinghouse Air with a short position of Magnachip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and Magnachip Semiconductor.
Diversification Opportunities for Westinghouse Air and Magnachip Semiconductor
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Westinghouse and Magnachip is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and Magnachip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnachip Semiconductor and Westinghouse Air 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 Westinghouse Air Brake 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 Westinghouse Air i.e., Westinghouse Air and Magnachip Semiconductor go up and down completely randomly.
Pair Corralation between Westinghouse Air and Magnachip Semiconductor
Assuming the 90 days horizon Westinghouse Air Brake is expected to generate 0.52 times more return on investment than Magnachip Semiconductor. However, Westinghouse Air Brake is 1.92 times less risky than Magnachip Semiconductor. It trades about 0.13 of its potential returns per unit of risk. Magnachip Semiconductor is currently generating about -0.03 per unit of risk. If you would invest 15,033 in Westinghouse Air Brake on September 3, 2024 and sell it today you would earn a total of 4,042 from holding Westinghouse Air Brake or generate 26.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westinghouse Air Brake vs. Magnachip Semiconductor
Performance |
| Timeline |
| Westinghouse Air Brake |
| Magnachip Semiconductor |
Westinghouse Air and Magnachip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and Magnachip Semiconductor
The main advantage of trading using opposite Westinghouse Air and Magnachip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air 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.| Westinghouse Air vs. Superior Plus Corp | Westinghouse Air vs. NMI Holdings | Westinghouse Air vs. Origin Agritech | Westinghouse Air vs. SIVERS SEMICONDUCTORS AB |
| Magnachip Semiconductor vs. Virtus Investment Partners | Magnachip Semiconductor vs. PennantPark Investment | Magnachip Semiconductor vs. MGIC INVESTMENT | Magnachip Semiconductor vs. HK Electric Investments |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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