Correlation Between WillScot Mobile and MagnaChip Semiconductor

Can any of the company-specific risk be diversified away by investing in both WillScot Mobile 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 WillScot Mobile and MagnaChip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WillScot Mobile Mini and MagnaChip Semiconductor Corp, you can compare the effects of market volatilities on WillScot Mobile 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 WillScot Mobile with a short position of MagnaChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of WillScot Mobile and MagnaChip Semiconductor.

Diversification Opportunities for WillScot Mobile and MagnaChip Semiconductor

0.08

Correlation Coefficient

WillScot Mobile  MagnaChip Semiconductor

Significant diversification

The 3 months correlation between WillScot and MagnaChip is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding WillScot Mobile Mini and MagnaChip Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor and WillScot Mobile 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 WillScot Mobile Mini 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 WillScot Mobile i.e., WillScot Mobile and MagnaChip Semiconductor go up and down completely randomly.

Pair Corralation between WillScot Mobile and MagnaChip Semiconductor

Assuming the 90 days trading horizon WillScot Mobile Mini is expected to under-perform the MagnaChip Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, WillScot Mobile Mini is 1.08 times less risky than MagnaChip Semiconductor. The stock trades about -0.1 of its potential returns per unit of risk. The MagnaChip Semiconductor Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  364.00  in MagnaChip Semiconductor Corp on September 23, 2024 and sell it today you would lose (6.00) from holding MagnaChip Semiconductor Corp or give up 1.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

WillScot Mobile Mini  vs.  MagnaChip Semiconductor Corp

WillScot Mobile Mini

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WillScot Mobile Mini has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

MagnaChip Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MagnaChip Semiconductor Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with WillScot Mobile and MagnaChip Semiconductor

The main advantage of trading using opposite WillScot Mobile and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WillScot Mobile 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.

The idea behind WillScot Mobile Mini and MagnaChip Semiconductor Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.