Correlation Between Microchip Technology and Schweiter Technologies
Can any of the company-specific risk be diversified away by investing in both Microchip Technology and Schweiter Technologies 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 Schweiter Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microchip Technology and Schweiter Technologies AG, you can compare the effects of market volatilities on Microchip Technology and Schweiter Technologies 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 Schweiter Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microchip Technology and Schweiter Technologies.
Diversification Opportunities for Microchip Technology and Schweiter Technologies
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microchip and Schweiter is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Microchip Technology and Schweiter Technologies AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schweiter Technologies 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 Schweiter Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schweiter Technologies has no effect on the direction of Microchip Technology i.e., Microchip Technology and Schweiter Technologies go up and down completely randomly.
Pair Corralation between Microchip Technology and Schweiter Technologies
Assuming the 90 days trading horizon Microchip Technology is expected to under-perform the Schweiter Technologies. In addition to that, Microchip Technology is 1.12 times more volatile than Schweiter Technologies AG. It trades about -0.09 of its total potential returns per unit of risk. Schweiter Technologies AG is currently generating about -0.02 per unit of volatility. If you would invest 44,850 in Schweiter Technologies AG on September 1, 2024 and sell it today you would lose (3,950) from holding Schweiter Technologies AG or give up 8.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Microchip Technology vs. Schweiter Technologies AG
Performance |
| Timeline |
| Microchip Technology |
| Schweiter Technologies |
Microchip Technology and Schweiter Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microchip Technology and Schweiter Technologies
The main advantage of trading using opposite Microchip Technology and Schweiter Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microchip Technology position performs unexpectedly, Schweiter Technologies 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 Schweiter Technologies will offset losses from the drop in Schweiter Technologies' long position.| Microchip Technology vs. MoneysupermarketCom Group PLC | Microchip Technology vs. Pets at Home | Microchip Technology vs. GoldMining | Microchip Technology vs. McEwen Mining |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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