Correlation Between Synaptics Incorporated and Globalfoundries

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

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

Diversification Opportunities for Synaptics Incorporated and Globalfoundries

0.53

Correlation Coefficient

Synaptics Incorporated  Globalfoundries

Very weak diversification

The 3 months correlation between Synaptics and Globalfoundries is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Synaptics Incorporated and Globalfoundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globalfoundries and Synaptics Incorporated 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 Synaptics Incorporated are associated (or correlated) with Globalfoundries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globalfoundries has no effect on the direction of Synaptics Incorporated i.e., Synaptics Incorporated and Globalfoundries go up and down completely randomly.

Pair Corralation between Synaptics Incorporated and Globalfoundries

Given the investment horizon of 90 days Synaptics Incorporated is expected to under-perform the Globalfoundries. In addition to that, Synaptics Incorporated is 1.1 times more volatile than Globalfoundries. It trades about 0.0 of its total potential returns per unit of risk. Globalfoundries is currently generating about 0.0 per unit of volatility. If you would invest  5,381  in Globalfoundries on September 19, 2024 and sell it today you would lose (858.00) from holding Globalfoundries or give up 15.94% of portfolio value over 90 days.

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

Synaptics Incorporated  vs.  Globalfoundries

Synaptics Incorporated

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Synaptics Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Synaptics Incorporated is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Globalfoundries

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Globalfoundries are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent technical and fundamental indicators, Globalfoundries may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Synaptics Incorporated and Globalfoundries

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

The idea behind Synaptics Incorporated and Globalfoundries 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.