Correlation Between Silicom and Impinj

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

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

Diversification Opportunities for Silicom and Impinj

-0.7

Correlation Coefficient

Silicom  Impinj

Excellent diversification

The 3 months correlation between Silicom and Impinj is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Silicom and Impinj Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impinj Inc and Silicom 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 Silicom are associated (or correlated) with Impinj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impinj Inc has no effect on the direction of Silicom i.e., Silicom and Impinj go up and down completely randomly.

Pair Corralation between Silicom and Impinj

Given the investment horizon of 90 days Silicom is expected to under-perform the Impinj. But the stock apears to be less risky and, when comparing its historical volatility, Silicom is 1.39 times less risky than Impinj. The stock trades about -0.05 of its potential returns per unit of risk. The Impinj Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  12,756  in Impinj Inc on October 5, 2024 and sell it today you would earn a total of  1,919  from holding Impinj Inc or generate 15.04% return on investment over 90 days.

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

Silicom  vs.  Impinj Inc

Silicom

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Silicom are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating essential indicators, Silicom exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Silicom and Impinj

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

The idea behind Silicom and Impinj Inc 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.