Correlation Between Marvell Technology and Charter Communications

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

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

Diversification Opportunities for Marvell Technology and Charter Communications

-0.04

Correlation Coefficient

Marvell Technology  Charter Communications

Good diversification

The 3 months correlation between Marvell and Charter is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Marvell Technology and Charter Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications and Marvell Technology 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 Marvell Technology are associated (or correlated) with Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of Marvell Technology i.e., Marvell Technology and Charter Communications go up and down completely randomly.

Pair Corralation between Marvell Technology and Charter Communications

Assuming the 90 days trading horizon Marvell Technology is expected to under-perform the Charter Communications. In addition to that, Marvell Technology is 2.85 times more volatile than Charter Communications. It trades about -0.23 of its total potential returns per unit of risk. Charter Communications is currently generating about 0.23 per unit of volatility. If you would invest  3,343  in Charter Communications on December 2, 2024 and sell it today you would earn a total of  228.00  from holding Charter Communications or generate 6.82% return on investment over 90 days.

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

Marvell Technology  vs.  Charter Communications

Marvell Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marvell Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Marvell Technology is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Charter Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Charter Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Marvell Technology and Charter Communications

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

The idea behind Marvell Technology and Charter Communications 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.