Correlation Between BrainChip Holdings and Silicon Laboratories

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

By analyzing existing cross correlation between BrainChip Holdings and Silicon Laboratories, you can compare the effects of market volatilities on BrainChip Holdings and Silicon Laboratories 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 Silicon Laboratories. Check out your portfolio center. Please also check ongoing floating volatility patterns of BrainChip Holdings and Silicon Laboratories.

Diversification Opportunities for BrainChip Holdings and Silicon Laboratories

-0.17

Correlation Coefficient

BrainChip Holdings  Silicon Laboratories

Good diversification

The 3 months correlation between BrainChip and Silicon is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding BrainChip Holdings and Silicon Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silicon Laboratories 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 Silicon Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silicon Laboratories has no effect on the direction of BrainChip Holdings i.e., BrainChip Holdings and Silicon Laboratories go up and down completely randomly.

Pair Corralation between BrainChip Holdings and Silicon Laboratories

Assuming the 90 days horizon BrainChip Holdings is expected to generate 14.48 times less return on investment than Silicon Laboratories. In addition to that, BrainChip Holdings is 1.74 times more volatile than Silicon Laboratories. It trades about 0.01 of its total potential returns per unit of risk. Silicon Laboratories is currently generating about 0.34 per unit of volatility. If you would invest  9,840  in Silicon Laboratories on September 20, 2024 and sell it today you would earn a total of  2,442  from holding Silicon Laboratories or generate 24.82% return on investment over 90 days.

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

BrainChip Holdings  vs.  Silicon Laboratories

BrainChip Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BrainChip Holdings are ranked lower than 7 (%) 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.

Silicon Laboratories

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Silicon Laboratories are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Silicon Laboratories may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with BrainChip Holdings and Silicon Laboratories

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

The idea behind BrainChip Holdings and Silicon Laboratories 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.