Correlation Between Navitas Semiconductor and Valens

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

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

Diversification Opportunities for Navitas Semiconductor and Valens

0.23

Correlation Coefficient

Navitas Semiconductor  Valens

Modest diversification

The 3 months correlation between Navitas and Valens is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Navitas Semiconductor Corp and Valens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valens and Navitas Semiconductor 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 Navitas Semiconductor Corp are associated (or correlated) with Valens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valens has no effect on the direction of Navitas Semiconductor i.e., Navitas Semiconductor and Valens go up and down completely randomly.

Pair Corralation between Navitas Semiconductor and Valens

Given the investment horizon of 90 days Navitas Semiconductor Corp is expected to generate 1.71 times more return on investment than Valens. However, Navitas Semiconductor is 1.71 times more volatile than Valens. It trades about 0.21 of its potential returns per unit of risk. Valens is currently generating about 0.08 per unit of risk. If you would invest  278.00  in Navitas Semiconductor Corp on September 26, 2024 and sell it today you would earn a total of  108.00  from holding Navitas Semiconductor Corp or generate 38.85% return on investment over 90 days.

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

Navitas Semiconductor Corp  vs.  Valens

Navitas Semiconductor

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Navitas Semiconductor Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Navitas Semiconductor unveiled solid returns over the last few months and may actually be approaching a breakup point.

Valens

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valens has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Navitas Semiconductor and Valens

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

The idea behind Navitas Semiconductor Corp and Valens 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..