Correlation Between Texas Instruments and Infineon Technologies

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

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

Diversification Opportunities for Texas Instruments and Infineon Technologies

-0.58

Correlation Coefficient

Texas Instruments  Infineon Technologies

Excellent diversification

The 3 months correlation between Texas and Infineon is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Texas Instruments Incorporated and Infineon Technologies AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infineon Technologies and Texas Instruments 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 Texas Instruments Incorporated are associated (or correlated) with Infineon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infineon Technologies has no effect on the direction of Texas Instruments i.e., Texas Instruments and Infineon Technologies go up and down completely randomly.

Pair Corralation between Texas Instruments and Infineon Technologies

If you would invest  4,082  in Infineon Technologies AG on October 20, 2024 and sell it today you would earn a total of  0.00  from holding Infineon Technologies AG or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	0.79%
Values	Daily Returns

Texas Instruments Incorporated  vs.  Infineon Technologies AG

Texas Instruments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Texas Instruments Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Texas Instruments is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Infineon Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Texas Instruments and Infineon Technologies

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

The idea behind Texas Instruments Incorporated and Infineon Technologies AG 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.