Correlation Between Monolithic Power and Silicon Motion
Can any of the company-specific risk be diversified away by investing in both Monolithic Power and Silicon Motion 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 Silicon Motion 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 Silicon Motion Technology, you can compare the effects of market volatilities on Monolithic Power and Silicon Motion 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 Silicon Motion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monolithic Power and Silicon Motion.
Diversification Opportunities for Monolithic Power and Silicon Motion
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Monolithic and Silicon is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Monolithic Power Systems and Silicon Motion Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silicon Motion Technology 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 Silicon Motion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silicon Motion Technology has no effect on the direction of Monolithic Power i.e., Monolithic Power and Silicon Motion go up and down completely randomly.
Pair Corralation between Monolithic Power and Silicon Motion
Given the investment horizon of 90 days Monolithic Power Systems is expected to under-perform the Silicon Motion. In addition to that, Monolithic Power is 1.4 times more volatile than Silicon Motion Technology. It trades about -0.08 of its total potential returns per unit of risk. Silicon Motion Technology is currently generating about 0.15 per unit of volatility. If you would invest 5,144 in Silicon Motion Technology on December 4, 2024 and sell it today you would earn a total of 379.00 from holding Silicon Motion Technology or generate 7.37% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Monolithic Power Systems vs. Silicon Motion Technology
Performance |
Timeline |
Monolithic Power Systems |
Silicon Motion Technology |
Monolithic Power and Silicon Motion Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Monolithic Power and Silicon Motion
The main advantage of trading using opposite Monolithic Power and Silicon Motion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monolithic Power position performs unexpectedly, Silicon Motion 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 Silicon Motion will offset losses from the drop in Silicon Motion's long position.Monolithic Power vs. Texas Instruments Incorporated | Monolithic Power vs. Microchip Technology | Monolithic Power vs. NXP Semiconductors NV | Monolithic Power vs. ON Semiconductor |
Silicon Motion vs. ASE Industrial Holding | Silicon Motion vs. United Microelectronics | Silicon Motion vs. ChipMOS Technologies | Silicon Motion vs. SemiLEDS |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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