Correlation Between Tower Semiconductor and Blender Financial

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

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

Diversification Opportunities for Tower Semiconductor and Blender Financial

-0.46

Correlation Coefficient

Tower Semiconductor  Blender Financial

Very good diversification

The 3 months correlation between Tower and Blender is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Tower Semiconductor and Blender Financial Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blender Financial and Tower Semiconductor 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 Tower Semiconductor are associated (or correlated) with Blender Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blender Financial has no effect on the direction of Tower Semiconductor i.e., Tower Semiconductor and Blender Financial go up and down completely randomly.

Pair Corralation between Tower Semiconductor and Blender Financial

Assuming the 90 days trading horizon Tower Semiconductor is expected to generate 1.9 times less return on investment than Blender Financial. But when comparing it to its historical volatility, Tower Semiconductor is 2.06 times less risky than Blender Financial. It trades about 0.2 of its potential returns per unit of risk. Blender Financial Technologies is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  33,700  in Blender Financial Technologies on October 12, 2024 and sell it today you would earn a total of  4,080  from holding Blender Financial Technologies or generate 12.11% return on investment over 90 days.

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

Tower Semiconductor  vs.  Blender Financial Technologies

Tower Semiconductor

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tower Semiconductor are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tower Semiconductor may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Blender Financial

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Tower Semiconductor and Blender Financial

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

The idea behind Tower Semiconductor and Blender Financial Technologies 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.