Correlation Between Semtech and Allstate

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

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

Diversification Opportunities for Semtech and Allstate

-0.14

Correlation Coefficient

Semtech  Allstate

Good diversification

The 3 months correlation between Semtech and Allstate is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Semtech and The Allstate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allstate and Semtech 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 Semtech are associated (or correlated) with Allstate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allstate has no effect on the direction of Semtech i.e., Semtech and Allstate go up and down completely randomly.

Pair Corralation between Semtech and Allstate

Given the investment horizon of 90 days Semtech is expected to generate 8.13 times more return on investment than Allstate. However, Semtech is 8.13 times more volatile than The Allstate. It trades about 0.2 of its potential returns per unit of risk. The Allstate is currently generating about 0.06 per unit of risk. If you would invest  4,248  in Semtech on September 4, 2024 and sell it today you would earn a total of  2,447  from holding Semtech or generate 57.6% return on investment over 90 days.

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

Semtech  vs.  The Allstate

Semtech

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Semtech are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Semtech exhibited solid returns over the last few months and may actually be approaching a breakup point.

Allstate

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Allstate are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady essential indicators, Allstate is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with Semtech and Allstate

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

The idea behind Semtech and The Allstate 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 CEOs Directory module to screen CEOs from public companies around the world.