Correlation Between ON Semiconductor and Pool

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

By analyzing existing cross correlation between ON Semiconductor and Pool Corporation, you can compare the effects of market volatilities on ON Semiconductor and Pool 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 Pool. Check out your portfolio center. Please also check ongoing floating volatility patterns of ON Semiconductor and Pool.

Diversification Opportunities for ON Semiconductor and Pool

-0.04

Correlation Coefficient

ON Semiconductor  Pool

Good diversification

The 3 months correlation between ON Semiconductor and Pool is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding ON Semiconductor and Pool Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pool 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 Pool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pool has no effect on the direction of ON Semiconductor i.e., ON Semiconductor and Pool go up and down completely randomly.

Pair Corralation between ON Semiconductor and Pool

Allowing for the 90-day total investment horizon ON Semiconductor is expected to under-perform the Pool. In addition to that, ON Semiconductor is 1.89 times more volatile than Pool Corporation. It trades about -0.21 of its total potential returns per unit of risk. Pool Corporation is currently generating about -0.07 per unit of volatility. If you would invest  33,975  in Pool Corporation on December 31, 2024 and sell it today you would lose (2,483) from holding Pool Corporation or give up 7.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ON Semiconductor  vs.  Pool Corp.

ON Semiconductor

Risk-Adjusted Performance

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 May 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pool

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pool Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with ON Semiconductor and Pool

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

The idea behind ON Semiconductor and Pool Corporation 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.