Correlation Between Impinj and Allegro Microsystems

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

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

Diversification Opportunities for Impinj and Allegro Microsystems

0.05

Correlation Coefficient

Impinj  Allegro Microsystems

Significant diversification

The 3 months correlation between Impinj and Allegro is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Impinj Inc and Allegro Microsystems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegro Microsystems and Impinj 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 Impinj Inc are associated (or correlated) with Allegro Microsystems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegro Microsystems has no effect on the direction of Impinj i.e., Impinj and Allegro Microsystems go up and down completely randomly.

Pair Corralation between Impinj and Allegro Microsystems

Allowing for the 90-day total investment horizon Impinj Inc is expected to generate 1.37 times more return on investment than Allegro Microsystems. However, Impinj is 1.37 times more volatile than Allegro Microsystems. It trades about 0.04 of its potential returns per unit of risk. Allegro Microsystems is currently generating about -0.01 per unit of risk. If you would invest  11,026  in Impinj Inc on September 24, 2024 and sell it today you would earn a total of  3,588  from holding Impinj Inc or generate 32.54% return on investment over 90 days.

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

Impinj Inc  vs.  Allegro Microsystems

Impinj Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Impinj Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Allegro Microsystems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allegro Microsystems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Allegro Microsystems is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Impinj and Allegro Microsystems

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

The idea behind Impinj Inc and Allegro Microsystems 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.