Correlation Between Monolithic Power and Ichor Holdings

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

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

Diversification Opportunities for Monolithic Power and Ichor Holdings

0.55

Correlation Coefficient

Monolithic Power  Ichor Holdings

Very weak diversification

The 3 months correlation between Monolithic and Ichor is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Monolithic Power Systems and Ichor Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ichor Holdings and Monolithic Power 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 Monolithic Power Systems are associated (or correlated) with Ichor Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ichor Holdings has no effect on the direction of Monolithic Power i.e., Monolithic Power and Ichor Holdings go up and down completely randomly.

Pair Corralation between Monolithic Power and Ichor Holdings

Given the investment horizon of 90 days Monolithic Power Systems is expected to generate 0.93 times more return on investment than Ichor Holdings. However, Monolithic Power Systems is 1.07 times less risky than Ichor Holdings. It trades about 0.0 of its potential returns per unit of risk. Ichor Holdings is currently generating about -0.1 per unit of risk. If you would invest  60,240  in Monolithic Power Systems on December 30, 2024 and sell it today you would lose (2,251) from holding Monolithic Power Systems or give up 3.74% of portfolio value over 90 days.

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

Monolithic Power Systems  vs.  Ichor Holdings

Monolithic Power Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Monolithic Power Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Monolithic Power is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Ichor Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ichor Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's technical indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Monolithic Power and Ichor Holdings

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

The idea behind Monolithic Power Systems and Ichor Holdings 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.