Correlation Between Western Union and MagnaChip Semiconductor
Can any of the company-specific risk be diversified away by investing in both Western Union 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 Western Union and MagnaChip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Union Co and MagnaChip Semiconductor, you can compare the effects of market volatilities on Western Union 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 Western Union with a short position of MagnaChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Union and MagnaChip Semiconductor.
Diversification Opportunities for Western Union and MagnaChip Semiconductor
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and MagnaChip is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Western Union Co and MagnaChip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and Western Union 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 Western Union Co 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 Western Union i.e., Western Union and MagnaChip Semiconductor go up and down completely randomly.
Pair Corralation between Western Union and MagnaChip Semiconductor
Allowing for the 90-day total investment horizon Western Union Co is expected to generate 0.43 times more return on investment than MagnaChip Semiconductor. However, Western Union Co is 2.32 times less risky than MagnaChip Semiconductor. It trades about -0.08 of its potential returns per unit of risk. MagnaChip Semiconductor is currently generating about -0.05 per unit of risk. If you would invest 1,162 in Western Union Co on September 12, 2024 and sell it today you would lose (75.50) from holding Western Union Co or give up 6.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Union Co vs. MagnaChip Semiconductor
Performance |
| Timeline |
| Western Union |
| MagnaChip Semiconductor |
Western Union and MagnaChip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Union and MagnaChip Semiconductor
The main advantage of trading using opposite Western Union and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Union 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.| Western Union vs. Navient Corp | Western Union vs. Green Dot | Western Union vs. Orix Corp Ads | Western Union vs. FirstCash |
| MagnaChip Semiconductor vs. CEVA Inc | MagnaChip Semiconductor vs. MACOM Technology Solutions | MagnaChip Semiconductor vs. FormFactor | MagnaChip Semiconductor vs. MaxLinear |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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