Correlation Between ON SEMICONDUCTOR and ENTAIN PLC

Can any of the company-specific risk be diversified away by investing in both ON SEMICONDUCTOR and ENTAIN PLC 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 ON SEMICONDUCTOR and ENTAIN PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ON SEMICONDUCTOR and ENTAIN PLC UNSPADR1, you can compare the effects of market volatilities on ON SEMICONDUCTOR and ENTAIN PLC 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 ON SEMICONDUCTOR with a short position of ENTAIN PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of ON SEMICONDUCTOR and ENTAIN PLC.

Diversification Opportunities for ON SEMICONDUCTOR and ENTAIN PLC

-0.17

Correlation Coefficient

ON SEMICONDUCTOR  ENTAIN PLC

Good diversification

The 3 months correlation between XS4 and ENTAIN is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding ON SEMICONDUCTOR and ENTAIN PLC UNSPADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENTAIN PLC UNSPADR1 and ON SEMICONDUCTOR 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 ON SEMICONDUCTOR are associated (or correlated) with ENTAIN PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENTAIN PLC UNSPADR1 has no effect on the direction of ON SEMICONDUCTOR i.e., ON SEMICONDUCTOR and ENTAIN PLC go up and down completely randomly.

Pair Corralation between ON SEMICONDUCTOR and ENTAIN PLC

Assuming the 90 days trading horizon ON SEMICONDUCTOR is expected to under-perform the ENTAIN PLC. But the stock apears to be less risky and, when comparing its historical volatility, ON SEMICONDUCTOR is 1.16 times less risky than ENTAIN PLC. The stock trades about -0.26 of its potential returns per unit of risk. The ENTAIN PLC UNSPADR1 is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  832.00  in ENTAIN PLC UNSPADR1 on December 21, 2024 and sell it today you would lose (62.00) from holding ENTAIN PLC UNSPADR1 or give up 7.45% of portfolio value over 90 days.

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

ON SEMICONDUCTOR  vs.  ENTAIN PLC UNSPADR1

ON SEMICONDUCTOR

Risk-Adjusted Performance

Very Weak

Over the last 90 days ON SEMICONDUCTOR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

ENTAIN PLC UNSPADR1

Risk-Adjusted Performance

Very Weak

Over the last 90 days ENTAIN PLC UNSPADR1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, ENTAIN PLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ON SEMICONDUCTOR and ENTAIN PLC

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

The idea behind ON SEMICONDUCTOR and ENTAIN PLC UNSPADR1 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 Global Correlations module to find global opportunities by holding instruments from different markets.