Correlation Between Texas Instruments and Synaptics Incorporated

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

Diversification Opportunities for Texas Instruments and Synaptics Incorporated

-0.01

Correlation Coefficient

Texas Instruments  Synaptics Incorporated

Good diversification

The 3 months correlation between Texas and Synaptics is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Texas Instruments Incorporated and Synaptics Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synaptics Incorporated 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 Synaptics Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synaptics Incorporated has no effect on the direction of Texas Instruments i.e., Texas Instruments and Synaptics Incorporated go up and down completely randomly.

Pair Corralation between Texas Instruments and Synaptics Incorporated

Considering the 90-day investment horizon Texas Instruments Incorporated is expected to generate 0.58 times more return on investment than Synaptics Incorporated. However, Texas Instruments Incorporated is 1.72 times less risky than Synaptics Incorporated. It trades about -0.01 of its potential returns per unit of risk. Synaptics Incorporated is currently generating about -0.08 per unit of risk. If you would invest  20,030  in Texas Instruments Incorporated on December 1, 2024 and sell it today you would lose (431.00) from holding Texas Instruments Incorporated or give up 2.15% of portfolio value over 90 days.

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

Texas Instruments Incorporated  vs.  Synaptics Incorporated

Texas Instruments

Risk-Adjusted Performance

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.

Synaptics Incorporated

Risk-Adjusted Performance

Very Weak

Over the last 90 days Synaptics Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Texas Instruments and Synaptics Incorporated

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

The idea behind Texas Instruments Incorporated and Synaptics Incorporated 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.