Correlation Between SILICON LABORATOR and Allstate

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

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

Diversification Opportunities for SILICON LABORATOR and Allstate

0.02

Correlation Coefficient

SILICON LABORATOR  Allstate

Significant diversification

The 3 months correlation between SILICON and Allstate is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding SILICON LABORATOR and The Allstate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allstate 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 Allstate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allstate has no effect on the direction of SILICON LABORATOR i.e., SILICON LABORATOR and Allstate go up and down completely randomly.

Pair Corralation between SILICON LABORATOR and Allstate

Assuming the 90 days trading horizon SILICON LABORATOR is expected to generate 1.47 times more return on investment than Allstate. However, SILICON LABORATOR is 1.47 times more volatile than The Allstate. It trades about 0.15 of its potential returns per unit of risk. The Allstate is currently generating about 0.05 per unit of risk. If you would invest  10,500  in SILICON LABORATOR on October 25, 2024 and sell it today you would earn a total of  2,800  from holding SILICON LABORATOR or generate 26.67% return on investment over 90 days.

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

SILICON LABORATOR  vs.  The Allstate

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.

Allstate

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Allstate are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Allstate is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SILICON LABORATOR and Allstate

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

The idea behind SILICON LABORATOR and The Allstate 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.

Check out your portfolio center.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.