Correlation Between Texas Instruments and Sequans Communications

Can any of the company-specific risk be diversified away by investing in both Texas Instruments and Sequans Communications 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 Sequans Communications 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 Sequans Communications SA, you can compare the effects of market volatilities on Texas Instruments and Sequans Communications 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 Sequans Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Texas Instruments and Sequans Communications.

Diversification Opportunities for Texas Instruments and Sequans Communications

-0.52

Correlation Coefficient

Texas Instruments  Sequans Communications

Excellent diversification

The 3 months correlation between Texas and Sequans is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Texas Instruments Incorporated and Sequans Communications SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sequans Communications 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 Sequans Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sequans Communications has no effect on the direction of Texas Instruments i.e., Texas Instruments and Sequans Communications go up and down completely randomly.

Pair Corralation between Texas Instruments and Sequans Communications

Considering the 90-day investment horizon Texas Instruments is expected to generate 2.45 times less return on investment than Sequans Communications. But when comparing it to its historical volatility, Texas Instruments Incorporated is 4.81 times less risky than Sequans Communications. It trades about 0.03 of its potential returns per unit of risk. Sequans Communications SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  785.00  in Sequans Communications SA on October 10, 2024 and sell it today you would lose (426.00) from holding Sequans Communications SA or give up 54.27% of portfolio value over 90 days.

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

Texas Instruments Incorporated  vs.  Sequans Communications SA

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.

Sequans Communications

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sequans Communications SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Sequans Communications unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Texas Instruments and Sequans Communications

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

The idea behind Texas Instruments Incorporated and Sequans Communications SA 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..