Correlation Between BrainChip Holdings and Marvell Technology

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

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

Diversification Opportunities for BrainChip Holdings and Marvell Technology

0.1

Correlation Coefficient

BrainChip Holdings  Marvell Technology

Average diversification

The 3 months correlation between BrainChip and Marvell is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding BrainChip Holdings and Marvell Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marvell Technology and BrainChip Holdings 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 BrainChip Holdings are associated (or correlated) with Marvell Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marvell Technology has no effect on the direction of BrainChip Holdings i.e., BrainChip Holdings and Marvell Technology go up and down completely randomly.

Pair Corralation between BrainChip Holdings and Marvell Technology

Assuming the 90 days horizon BrainChip Holdings is expected to under-perform the Marvell Technology. But the otc stock apears to be less risky and, when comparing its historical volatility, BrainChip Holdings is 1.18 times less risky than Marvell Technology. The otc stock trades about -0.02 of its potential returns per unit of risk. The Marvell Technology Group is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  8,871  in Marvell Technology Group on September 19, 2024 and sell it today you would earn a total of  2,261  from holding Marvell Technology Group or generate 25.49% return on investment over 90 days.

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

BrainChip Holdings  vs.  Marvell Technology Group

BrainChip Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BrainChip Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, BrainChip Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Marvell Technology

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marvell Technology Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Marvell Technology disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BrainChip Holdings and Marvell Technology

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

The idea behind BrainChip Holdings and Marvell Technology Group 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.