Correlation Between Marvell Technology and Sony

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

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

Diversification Opportunities for Marvell Technology and Sony

0.89

Correlation Coefficient

Marvell Technology  Sony

Very poor diversification

The 3 months correlation between Marvell and Sony is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Marvell Technology and Sony Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sony Group 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 Sony. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sony Group has no effect on the direction of Marvell Technology i.e., Marvell Technology and Sony go up and down completely randomly.

Pair Corralation between Marvell Technology and Sony

Assuming the 90 days trading horizon Marvell Technology is expected to generate 3.45 times more return on investment than Sony. However, Marvell Technology is 3.45 times more volatile than Sony Group. It trades about 0.23 of its potential returns per unit of risk. Sony Group is currently generating about 0.38 per unit of risk. If you would invest  5,385  in Marvell Technology on September 27, 2024 and sell it today you would earn a total of  1,797  from holding Marvell Technology or generate 33.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Marvell Technology  vs.  Sony Group

Marvell Technology

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Marvell Technology are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Marvell Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Sony Group

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sony Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Sony sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marvell Technology and Sony

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

The idea behind Marvell Technology and Sony Group 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.