Correlation Between WESCO International and Magnachip Semiconductor
Can any of the company-specific risk be diversified away by investing in both WESCO International 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 WESCO International and Magnachip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WESCO International and Magnachip Semiconductor, you can compare the effects of market volatilities on WESCO International 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 WESCO International with a short position of Magnachip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of WESCO International and Magnachip Semiconductor.
Diversification Opportunities for WESCO International and Magnachip Semiconductor
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WESCO and Magnachip is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding WESCO International and Magnachip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnachip Semiconductor and WESCO International 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 WESCO International 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 WESCO International i.e., WESCO International and Magnachip Semiconductor go up and down completely randomly.
Pair Corralation between WESCO International and Magnachip Semiconductor
Assuming the 90 days horizon WESCO International is expected to generate 0.84 times more return on investment than Magnachip Semiconductor. However, WESCO International is 1.2 times less risky than Magnachip Semiconductor. It trades about 0.05 of its potential returns per unit of risk. Magnachip Semiconductor is currently generating about 0.0 per unit of risk. If you would invest 16,163 in WESCO International on October 30, 2024 and sell it today you would earn a total of 1,137 from holding WESCO International or generate 7.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.33% |
| Values | Daily Returns |
WESCO International vs. Magnachip Semiconductor
Performance |
| Timeline |
| WESCO International |
| Magnachip Semiconductor |
WESCO International and Magnachip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WESCO International and Magnachip Semiconductor
The main advantage of trading using opposite WESCO International and Magnachip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WESCO International 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.| WESCO International vs. MCEWEN MINING INC | WESCO International vs. Scottish Mortgage Investment | WESCO International vs. HK Electric Investments | WESCO International vs. GALENA MINING LTD |
| Magnachip Semiconductor vs. KENEDIX OFFICE INV | Magnachip Semiconductor vs. Neinor Homes SA | Magnachip Semiconductor vs. Taylor Morrison Home | Magnachip Semiconductor vs. INTER CARS SA |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |