Correlation Between NVIDIA and MagnaChip Semiconductor
Can any of the company-specific risk be diversified away by investing in both NVIDIA 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 NVIDIA and MagnaChip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and MagnaChip Semiconductor, you can compare the effects of market volatilities on NVIDIA 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 NVIDIA with a short position of MagnaChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and MagnaChip Semiconductor.
Diversification Opportunities for NVIDIA and MagnaChip Semiconductor
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NVIDIA and MagnaChip is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and MagnaChip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and NVIDIA 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 NVIDIA 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 NVIDIA i.e., NVIDIA and MagnaChip Semiconductor go up and down completely randomly.
Pair Corralation between NVIDIA and MagnaChip Semiconductor
Given the investment horizon of 90 days NVIDIA is expected to generate 1.28 times more return on investment than MagnaChip Semiconductor. However, NVIDIA is 1.28 times more volatile than MagnaChip Semiconductor. It trades about -0.13 of its potential returns per unit of risk. MagnaChip Semiconductor is currently generating about -0.39 per unit of risk. If you would invest 90,372 in NVIDIA on January 20, 2024 and sell it today you would lose (5,701) from holding NVIDIA or give up 6.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NVIDIA vs. MagnaChip Semiconductor
Performance |
| Timeline |
| NVIDIA |
| MagnaChip Semiconductor |
NVIDIA and MagnaChip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and MagnaChip Semiconductor
The main advantage of trading using opposite NVIDIA and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA 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.| NVIDIA vs. Intel | NVIDIA vs. Taiwan Semiconductor Manufacturing | NVIDIA vs. Marvell Technology Group | NVIDIA vs. Micron Technology |
| 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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