Correlation Between OReilly Automotive and Marvell Technology

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

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

Diversification Opportunities for OReilly Automotive and Marvell Technology

0.91

Correlation Coefficient

OReilly Automotive  Marvell Technology

Almost no diversification

The 3 months correlation between OReilly and Marvell is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding OReilly Automotive and Marvell Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marvell Technology and OReilly Automotive 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 OReilly Automotive are associated (or correlated) with Marvell Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marvell Technology has no effect on the direction of OReilly Automotive i.e., OReilly Automotive and Marvell Technology go up and down completely randomly.

Pair Corralation between OReilly Automotive and Marvell Technology

Assuming the 90 days trading horizon OReilly Automotive is expected to generate 3.26 times less return on investment than Marvell Technology. But when comparing it to its historical volatility, OReilly Automotive is 2.46 times less risky than Marvell Technology. It trades about 0.19 of its potential returns per unit of risk. Marvell Technology is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  4,025  in Marvell Technology on September 16, 2024 and sell it today you would earn a total of  3,248  from holding Marvell Technology or generate 80.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

OReilly Automotive  vs.  Marvell Technology

OReilly Automotive

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in OReilly Automotive are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, OReilly Automotive sustained solid returns over the last few months and may actually be approaching a breakup point.

Marvell Technology

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Marvell Technology are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Marvell Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OReilly Automotive and Marvell Technology

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

The idea behind OReilly Automotive and Marvell Technology 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.