Correlation Between SILICON LABORATOR and American Woodmark

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

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

Diversification Opportunities for SILICON LABORATOR and American Woodmark

-0.76

Correlation Coefficient

SILICON LABORATOR  American Woodmark

Pay attention - limited upside

The 3 months correlation between SILICON and American is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding SILICON LABORATOR and American Woodmark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Woodmark and SILICON LABORATOR 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 SILICON LABORATOR are associated (or correlated) with American Woodmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Woodmark has no effect on the direction of SILICON LABORATOR i.e., SILICON LABORATOR and American Woodmark go up and down completely randomly.

Pair Corralation between SILICON LABORATOR and American Woodmark

Assuming the 90 days trading horizon SILICON LABORATOR is expected to generate 179.67 times less return on investment than American Woodmark. In addition to that, SILICON LABORATOR is 1.16 times more volatile than American Woodmark. It trades about 0.0 of its total potential returns per unit of risk. American Woodmark is currently generating about 0.05 per unit of volatility. If you would invest  5,250  in American Woodmark on October 23, 2024 and sell it today you would earn a total of  2,550  from holding American Woodmark or generate 48.57% return on investment over 90 days.

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

SILICON LABORATOR  vs.  American Woodmark

SILICON LABORATOR

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SILICON LABORATOR are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SILICON LABORATOR unveiled solid returns over the last few months and may actually be approaching a breakup point.

American Woodmark

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Woodmark has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain 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 SILICON LABORATOR and American Woodmark

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

The idea behind SILICON LABORATOR and American Woodmark 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.