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 Corp, 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
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Westinghouse and MagnaChip is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and MagnaChip Semiconductor Corp 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 under-perform the MagnaChip Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Westinghouse Air Brake is 1.39 times less risky than MagnaChip Semiconductor. The stock trades about -0.25 of its potential returns per unit of risk. The MagnaChip Semiconductor Corp is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 384.00 in MagnaChip Semiconductor Corp on December 1, 2024 and sell it today you would earn a total of 56.00 from holding MagnaChip Semiconductor Corp or generate 14.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westinghouse Air Brake vs. MagnaChip Semiconductor Corp
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. Beta Systems Software | Westinghouse Air vs. FORMPIPE SOFTWARE AB | Westinghouse Air vs. Take Two Interactive Software | Westinghouse Air vs. De Grey Mining |
| MagnaChip Semiconductor vs. CARSALESCOM | MagnaChip Semiconductor vs. Motorcar Parts of | MagnaChip Semiconductor vs. Alfa Financial Software | MagnaChip Semiconductor vs. COMMERCIAL VEHICLE |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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