Correlation Between MACOM Technology and Tigo Energy

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

Diversification Opportunities for MACOM Technology and Tigo Energy

0.31

Correlation Coefficient

MACOM Technology  Tigo Energy

Weak diversification

The 3 months correlation between MACOM and Tigo is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and Tigo Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tigo Energy 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 Tigo Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tigo Energy has no effect on the direction of MACOM Technology i.e., MACOM Technology and Tigo Energy go up and down completely randomly.

Pair Corralation between MACOM Technology and Tigo Energy

Given the investment horizon of 90 days MACOM Technology Solutions is expected to under-perform the Tigo Energy. But the stock apears to be less risky and, when comparing its historical volatility, MACOM Technology Solutions is 1.43 times less risky than Tigo Energy. The stock trades about -0.11 of its potential returns per unit of risk. The Tigo Energy is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  90.00  in Tigo Energy on December 19, 2024 and sell it today you would lose (1.00) from holding Tigo Energy or give up 1.11% of portfolio value over 90 days.

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

MACOM Technology Solutions  vs.  Tigo Energy

MACOM Technology Sol

Risk-Adjusted Performance

Very Weak

Over the last 90 days MACOM Technology Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent 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.

Tigo Energy

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tigo Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Tigo Energy is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with MACOM Technology and Tigo Energy

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

The idea behind MACOM Technology Solutions and Tigo Energy 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.