Correlation Between Calix and Silicom

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

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

Diversification Opportunities for Calix and Silicom

0.64

Correlation Coefficient

Calix  Silicom

Poor diversification

The 3 months correlation between Calix and Silicom is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Calix Inc and Silicom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silicom and Calix 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 Calix Inc are associated (or correlated) with Silicom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silicom has no effect on the direction of Calix i.e., Calix and Silicom go up and down completely randomly.

Pair Corralation between Calix and Silicom

Given the investment horizon of 90 days Calix Inc is expected to generate 1.04 times more return on investment than Silicom. However, Calix is 1.04 times more volatile than Silicom. It trades about 0.02 of its potential returns per unit of risk. Silicom is currently generating about 0.0 per unit of risk. If you would invest  3,489  in Calix Inc on December 28, 2024 and sell it today you would earn a total of  15.00  from holding Calix Inc or generate 0.43% return on investment over 90 days.

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

Calix Inc  vs.  Silicom

Calix Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Calix Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, Calix is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Silicom

Risk-Adjusted Performance

Very Weak

Over the last 90 days Silicom has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Silicom is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Calix and Silicom

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

The idea behind Calix Inc and Silicom 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.