Correlation Between United States and Marvell Technology

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

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

Diversification Opportunities for United States and Marvell Technology

0.59

Correlation Coefficient

United States  Marvell Technology

Very weak diversification

The 3 months correlation between United and Marvell is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Marvell Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marvell Technology and United States 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 United States Steel are associated (or correlated) with Marvell Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marvell Technology has no effect on the direction of United States i.e., United States and Marvell Technology go up and down completely randomly.

Pair Corralation between United States and Marvell Technology

Assuming the 90 days trading horizon United States is expected to generate 33.8 times less return on investment than Marvell Technology. But when comparing it to its historical volatility, United States Steel is 1.44 times less risky than Marvell Technology. It trades about 0.01 of its potential returns per unit of risk. Marvell Technology is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  4,025  in Marvell Technology on September 16, 2024 and sell it today you would earn a total of  3,248  from holding Marvell Technology or generate 80.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

United States Steel  vs.  Marvell Technology

United States Steel

Risk-Adjusted Performance

0 of 100

Very Weak

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

Marvell Technology

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Marvell Technology are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Marvell Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United States and Marvell Technology

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

The idea behind United States Steel and Marvell Technology 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.