Correlation Between Marvell Technology and Navitas Semiconductor

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

Diversification Opportunities for Marvell Technology and Navitas Semiconductor

0.63

Correlation Coefficient

Marvell Technology  Navitas Semiconductor

Poor diversification

The 3 months correlation between Marvell and Navitas is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Marvell Technology Group and Navitas Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Navitas Semiconductor 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 Navitas Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Navitas Semiconductor has no effect on the direction of Marvell Technology i.e., Marvell Technology and Navitas Semiconductor go up and down completely randomly.

Pair Corralation between Marvell Technology and Navitas Semiconductor

Given the investment horizon of 90 days Marvell Technology Group is expected to generate 0.74 times more return on investment than Navitas Semiconductor. However, Marvell Technology Group is 1.36 times less risky than Navitas Semiconductor. It trades about 0.08 of its potential returns per unit of risk. Navitas Semiconductor Corp is currently generating about 0.01 per unit of risk. If you would invest  3,567  in Marvell Technology Group on September 21, 2024 and sell it today you would earn a total of  7,344  from holding Marvell Technology Group or generate 205.89% return on investment over 90 days.

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

Marvell Technology Group  vs.  Navitas Semiconductor Corp

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.

Navitas Semiconductor

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Navitas Semiconductor Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Navitas Semiconductor unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marvell Technology and Navitas Semiconductor

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

The idea behind Marvell Technology Group and Navitas Semiconductor Corp 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .