Correlation Between Motorola Solutions and Microwave Filter

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

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

Diversification Opportunities for Motorola Solutions and Microwave Filter

0.0

Correlation Coefficient

Motorola Solutions  Microwave Filter

Pay attention - limited upside

The 3 months correlation between Motorola and Microwave is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Motorola Solutions and Microwave Filter in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microwave Filter and Motorola Solutions 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 Motorola Solutions are associated (or correlated) with Microwave Filter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microwave Filter has no effect on the direction of Motorola Solutions i.e., Motorola Solutions and Microwave Filter go up and down completely randomly.

Pair Corralation between Motorola Solutions and Microwave Filter

If you would invest (100.00) in Microwave Filter on December 1, 2024 and sell it today you would earn a total of  100.00  from holding Microwave Filter or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Motorola Solutions  vs.  Microwave Filter

Motorola Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Motorola Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Microwave Filter

Risk-Adjusted Performance

Very Weak

Over the last 90 days Microwave Filter has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Microwave Filter is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Motorola Solutions and Microwave Filter

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

The idea behind Motorola Solutions and Microwave Filter 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.