Correlation Between ON Semiconductor and Mountain Crest

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

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

Diversification Opportunities for ON Semiconductor and Mountain Crest

0.0

Correlation Coefficient

ON Semiconductor  Mountain Crest

Pay attention - limited upside

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

Pair Corralation between ON Semiconductor and Mountain Crest

Allowing for the 90-day total investment horizon ON Semiconductor is expected to generate 0.14 times more return on investment than Mountain Crest. However, ON Semiconductor is 7.23 times less risky than Mountain Crest. It trades about 0.0 of its potential returns per unit of risk. Mountain Crest Acquisition is currently generating about -0.24 per unit of risk. If you would invest  7,080  in ON Semiconductor on October 13, 2024 and sell it today you would lose (1,686) from holding ON Semiconductor or give up 23.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	4.65%
Values	Daily Returns

ON Semiconductor  vs.  Mountain Crest Acquisition

ON Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ON Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Mountain Crest Acqui

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mountain Crest Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Mountain Crest is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ON Semiconductor and Mountain Crest

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

The idea behind ON Semiconductor and Mountain Crest Acquisition 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.