Correlation Between Microchip Technology and AIM ImmunoTech
Can any of the company-specific risk be diversified away by investing in both Microchip Technology and AIM ImmunoTech 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 Microchip Technology and AIM ImmunoTech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microchip Technology and AIM ImmunoTech, you can compare the effects of market volatilities on Microchip Technology and AIM ImmunoTech 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 Microchip Technology with a short position of AIM ImmunoTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microchip Technology and AIM ImmunoTech.
Diversification Opportunities for Microchip Technology and AIM ImmunoTech
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Microchip and AIM is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Microchip Technology and AIM ImmunoTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIM ImmunoTech and Microchip Technology 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 Microchip Technology are associated (or correlated) with AIM ImmunoTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIM ImmunoTech has no effect on the direction of Microchip Technology i.e., Microchip Technology and AIM ImmunoTech go up and down completely randomly.
Pair Corralation between Microchip Technology and AIM ImmunoTech
Assuming the 90 days trading horizon Microchip Technology is expected to under-perform the AIM ImmunoTech. But the stock apears to be less risky and, when comparing its historical volatility, Microchip Technology is 2.54 times less risky than AIM ImmunoTech. The stock trades about -0.16 of its potential returns per unit of risk. The AIM ImmunoTech is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 26.00 in AIM ImmunoTech on September 2, 2024 and sell it today you would lose (3.00) from holding AIM ImmunoTech or give up 11.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Microchip Technology vs. AIM ImmunoTech
Performance |
| Timeline |
| Microchip Technology |
| AIM ImmunoTech |
Microchip Technology and AIM ImmunoTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microchip Technology and AIM ImmunoTech
The main advantage of trading using opposite Microchip Technology and AIM ImmunoTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microchip Technology position performs unexpectedly, AIM ImmunoTech 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 AIM ImmunoTech will offset losses from the drop in AIM ImmunoTech's long position.| Microchip Technology vs. Uniper SE | Microchip Technology vs. Mulberry Group PLC | Microchip Technology vs. London Security Plc | Microchip Technology vs. Triad Group PLC |
| AIM ImmunoTech vs. Omega Healthcare Investors | AIM ImmunoTech vs. Cellnex Telecom SA | AIM ImmunoTech vs. Target Healthcare REIT | AIM ImmunoTech vs. Planet Fitness Cl |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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