Correlation Between MACOM Technology and Analog Devices
Can any of the company-specific risk be diversified away by investing in both MACOM Technology and Analog Devices 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 MACOM Technology and Analog Devices into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MACOM Technology Solutions and Analog Devices, you can compare the effects of market volatilities on MACOM Technology and Analog Devices 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 MACOM Technology with a short position of Analog Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and Analog Devices.
Diversification Opportunities for MACOM Technology and Analog Devices
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MACOM and Analog is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and Analog Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Devices and MACOM 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 MACOM Technology Solutions are associated (or correlated) with Analog Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Analog Devices has no effect on the direction of MACOM Technology i.e., MACOM Technology and Analog Devices go up and down completely randomly.
Pair Corralation between MACOM Technology and Analog Devices
Given the investment horizon of 90 days MACOM Technology Solutions is expected to generate 1.58 times more return on investment than Analog Devices. However, MACOM Technology is 1.58 times more volatile than Analog Devices. It trades about 0.0 of its potential returns per unit of risk. Analog Devices is currently generating about -0.18 per unit of risk. If you would invest 13,537 in MACOM Technology Solutions on September 25, 2024 and sell it today you would lose (67.00) from holding MACOM Technology Solutions or give up 0.49% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
MACOM Technology Solutions vs. Analog Devices
Performance |
Timeline |
MACOM Technology Sol |
Analog Devices |
MACOM Technology and Analog Devices Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with MACOM Technology and Analog Devices
The main advantage of trading using opposite MACOM Technology and Analog Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology position performs unexpectedly, Analog Devices 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 Analog Devices will offset losses from the drop in Analog Devices' long position.MACOM Technology vs. Diodes Incorporated | MACOM Technology vs. Nano Labs | MACOM Technology vs. Enphase Energy |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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