Correlation Between Silicon Motion and STRAYER EDUCATION

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

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

Diversification Opportunities for Silicon Motion and STRAYER EDUCATION

-0.27

Correlation Coefficient

Silicon Motion  STRAYER EDUCATION

Very good diversification

The 3 months correlation between Silicon and STRAYER is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and STRAYER EDUCATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRAYER EDUCATION and Silicon Motion 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 Silicon Motion Technology are associated (or correlated) with STRAYER EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRAYER EDUCATION has no effect on the direction of Silicon Motion i.e., Silicon Motion and STRAYER EDUCATION go up and down completely randomly.

Pair Corralation between Silicon Motion and STRAYER EDUCATION

Assuming the 90 days trading horizon Silicon Motion Technology is expected to under-perform the STRAYER EDUCATION. In addition to that, Silicon Motion is 1.47 times more volatile than STRAYER EDUCATION. It trades about -0.08 of its total potential returns per unit of risk. STRAYER EDUCATION is currently generating about 0.09 per unit of volatility. If you would invest  8,589  in STRAYER EDUCATION on August 31, 2024 and sell it today you would earn a total of  761.00  from holding STRAYER EDUCATION or generate 8.86% return on investment over 90 days.

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

Silicon Motion Technology  vs.  STRAYER EDUCATION

Silicon Motion Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silicon Motion Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

STRAYER EDUCATION

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in STRAYER EDUCATION are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, STRAYER EDUCATION may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Silicon Motion and STRAYER EDUCATION

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

The idea behind Silicon Motion Technology and STRAYER EDUCATION 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.