Correlation Between MACOM Technology and DISTRICT METALS

Can any of the company-specific risk be diversified away by investing in both MACOM Technology and DISTRICT METALS 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 MACOM Technology and DISTRICT METALS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MACOM Technology Solutions and DISTRICT METALS, you can compare the effects of market volatilities on MACOM Technology and DISTRICT METALS 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 MACOM Technology with a short position of DISTRICT METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and DISTRICT METALS.

Diversification Opportunities for MACOM Technology and DISTRICT METALS

0.82

Correlation Coefficient

MACOM Technology  DISTRICT METALS

Very poor diversification

The 3 months correlation between MACOM and DISTRICT is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and DISTRICT METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DISTRICT METALS and MACOM Technology 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 MACOM Technology Solutions are associated (or correlated) with DISTRICT METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DISTRICT METALS has no effect on the direction of MACOM Technology i.e., MACOM Technology and DISTRICT METALS go up and down completely randomly.

Pair Corralation between MACOM Technology and DISTRICT METALS

Assuming the 90 days horizon MACOM Technology Solutions is expected to under-perform the DISTRICT METALS. But the stock apears to be less risky and, when comparing its historical volatility, MACOM Technology Solutions is 1.34 times less risky than DISTRICT METALS. The stock trades about -0.14 of its potential returns per unit of risk. The DISTRICT METALS is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  24.00  in DISTRICT METALS on December 21, 2024 and sell it today you would lose (3.00) from holding DISTRICT METALS or give up 12.5% of portfolio value over 90 days.

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

MACOM Technology Solutions  vs.  DISTRICT METALS

MACOM Technology Sol

Risk-Adjusted Performance

Very Weak

Over the last 90 days MACOM Technology Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

DISTRICT METALS

Risk-Adjusted Performance

Very Weak

Over the last 90 days DISTRICT METALS 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.

Pair Trading with MACOM Technology and DISTRICT METALS

The main advantage of trading using opposite MACOM Technology and DISTRICT METALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology position performs unexpectedly, DISTRICT METALS 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 DISTRICT METALS will offset losses from the drop in DISTRICT METALS's long position.

The idea behind MACOM Technology Solutions and DISTRICT METALS 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.