Correlation Between Marvell Technology and Diodes Incorporated

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

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

Diversification Opportunities for Marvell Technology and Diodes Incorporated

0.18

Correlation Coefficient

Marvell Technology  Diodes Incorporated

Average diversification

The 3 months correlation between Marvell and Diodes is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Marvell Technology Group and Diodes Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diodes Incorporated 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 Group are associated (or correlated) with Diodes Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diodes Incorporated has no effect on the direction of Marvell Technology i.e., Marvell Technology and Diodes Incorporated go up and down completely randomly.

Pair Corralation between Marvell Technology and Diodes Incorporated

Given the investment horizon of 90 days Marvell Technology Group is expected to generate 1.5 times more return on investment than Diodes Incorporated. However, Marvell Technology is 1.5 times more volatile than Diodes Incorporated. It trades about 0.17 of its potential returns per unit of risk. Diodes Incorporated is currently generating about -0.01 per unit of risk. If you would invest  7,764  in Marvell Technology Group on October 13, 2024 and sell it today you would earn a total of  3,668  from holding Marvell Technology Group or generate 47.24% return on investment over 90 days.

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

Marvell Technology Group  vs.  Diodes Incorporated

Marvell Technology

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marvell Technology Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Marvell Technology disclosed solid returns over the last few months and may actually be approaching a breakup point.

Diodes Incorporated

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diodes Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Diodes Incorporated is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Marvell Technology and Diodes Incorporated

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

The idea behind Marvell Technology Group and Diodes Incorporated 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.