Correlation Between Marvell Technology and Infineon Technologies

Can any of the company-specific risk be diversified away by investing in both Marvell Technology and Infineon Technologies 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 Infineon Technologies 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 Infineon Technologies AG, you can compare the effects of market volatilities on Marvell Technology and Infineon Technologies 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 Infineon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marvell Technology and Infineon Technologies.

Diversification Opportunities for Marvell Technology and Infineon Technologies

0.67

Correlation Coefficient

Marvell Technology  Infineon Technologies

Poor diversification

The 3 months correlation between Marvell and Infineon is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Marvell Technology Group and Infineon Technologies AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infineon Technologies 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 Infineon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infineon Technologies has no effect on the direction of Marvell Technology i.e., Marvell Technology and Infineon Technologies go up and down completely randomly.

Pair Corralation between Marvell Technology and Infineon Technologies

If you would invest  5,429  in Marvell Technology Group on October 5, 2024 and sell it today you would earn a total of  5,927  from holding Marvell Technology Group or generate 109.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	0.37%
Values	Daily Returns

Marvell Technology Group  vs.  Infineon Technologies AG

Marvell Technology

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marvell Technology Group are ranked lower than 14 (%) 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.

Infineon Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Infineon Technologies AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Infineon Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Marvell Technology and Infineon Technologies

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

The idea behind Marvell Technology Group and Infineon Technologies AG 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.