Correlation Between Wolfspeed and Silicon Laboratories
Can any of the company-specific risk be diversified away by investing in both Wolfspeed and Silicon Laboratories 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 Wolfspeed and Silicon Laboratories into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wolfspeed and Silicon Laboratories, you can compare the effects of market volatilities on Wolfspeed and Silicon Laboratories 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 Wolfspeed with a short position of Silicon Laboratories. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wolfspeed and Silicon Laboratories.
Diversification Opportunities for Wolfspeed and Silicon Laboratories
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Wolfspeed and Silicon is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Wolfspeed and Silicon Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silicon Laboratories and Wolfspeed 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 Wolfspeed are associated (or correlated) with Silicon Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silicon Laboratories has no effect on the direction of Wolfspeed i.e., Wolfspeed and Silicon Laboratories go up and down completely randomly.
Pair Corralation between Wolfspeed and Silicon Laboratories
Given the investment horizon of 90 days Wolfspeed is expected to under-perform the Silicon Laboratories. In addition to that, Wolfspeed is 2.18 times more volatile than Silicon Laboratories. It trades about -0.02 of its total potential returns per unit of risk. Silicon Laboratories is currently generating about -0.02 per unit of volatility. If you would invest 13,479 in Silicon Laboratories on December 4, 2024 and sell it today you would lose (343.00) from holding Silicon Laboratories or give up 2.54% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 95.24% |
Values | Daily Returns |
Wolfspeed vs. Silicon Laboratories
Performance |
Timeline |
Wolfspeed |
Silicon Laboratories |
Wolfspeed and Silicon Laboratories Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Wolfspeed and Silicon Laboratories
The main advantage of trading using opposite Wolfspeed and Silicon Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wolfspeed position performs unexpectedly, Silicon Laboratories 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 Silicon Laboratories will offset losses from the drop in Silicon Laboratories' long position.Wolfspeed vs. NXP Semiconductors NV | Wolfspeed vs. Analog Devices | Wolfspeed vs. Microchip Technology | Wolfspeed vs. Monolithic Power Systems |
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Check out your portfolio center.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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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