Correlation Between Everspin Technologies and EMCORE

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

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

Diversification Opportunities for Everspin Technologies and EMCORE

0.1

Correlation Coefficient

Everspin Technologies  EMCORE

Average diversification

The 3 months correlation between Everspin and EMCORE is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Everspin Technologies and EMCORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCORE and Everspin Technologies 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 Everspin Technologies are associated (or correlated) with EMCORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMCORE has no effect on the direction of Everspin Technologies i.e., Everspin Technologies and EMCORE go up and down completely randomly.

Pair Corralation between Everspin Technologies and EMCORE

Given the investment horizon of 90 days Everspin Technologies is expected to generate 3.72 times more return on investment than EMCORE. However, Everspin Technologies is 3.72 times more volatile than EMCORE. It trades about 0.01 of its potential returns per unit of risk. EMCORE is currently generating about -0.13 per unit of risk. If you would invest  632.00  in Everspin Technologies on October 22, 2024 and sell it today you would earn a total of  0.00  from holding Everspin Technologies or generate 0.0% return on investment over 90 days.

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

Everspin Technologies  vs.  EMCORE

Everspin Technologies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Everspin Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Everspin Technologies may actually be approaching a critical reversion point that can send shares even higher in February 2025.

EMCORE

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EMCORE are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal forward-looking signals, EMCORE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Everspin Technologies and EMCORE

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

The idea behind Everspin Technologies and EMCORE 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.