Correlation Between MACOM Technology and ARISTOCRAT LEISURE
Can any of the company-specific risk be diversified away by investing in both MACOM Technology and ARISTOCRAT LEISURE 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 MACOM Technology and ARISTOCRAT LEISURE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MACOM Technology Solutions and ARISTOCRAT LEISURE, you can compare the effects of market volatilities on MACOM Technology and ARISTOCRAT LEISURE 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 MACOM Technology with a short position of ARISTOCRAT LEISURE. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and ARISTOCRAT LEISURE.
Diversification Opportunities for MACOM Technology and ARISTOCRAT LEISURE
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between MACOM and ARISTOCRAT is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and ARISTOCRAT LEISURE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARISTOCRAT LEISURE and MACOM 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 MACOM Technology Solutions are associated (or correlated) with ARISTOCRAT LEISURE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARISTOCRAT LEISURE has no effect on the direction of MACOM Technology i.e., MACOM Technology and ARISTOCRAT LEISURE go up and down completely randomly.
Pair Corralation between MACOM Technology and ARISTOCRAT LEISURE
Assuming the 90 days horizon MACOM Technology Solutions is expected to generate 4.09 times more return on investment than ARISTOCRAT LEISURE. However, MACOM Technology is 4.09 times more volatile than ARISTOCRAT LEISURE. It trades about 0.22 of its potential returns per unit of risk. ARISTOCRAT LEISURE is currently generating about 0.66 per unit of risk. If you would invest 10,800 in MACOM Technology Solutions on August 28, 2024 and sell it today you would earn a total of 2,000 from holding MACOM Technology Solutions or generate 18.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MACOM Technology Solutions vs. ARISTOCRAT LEISURE
Performance |
| Timeline |
| MACOM Technology Sol |
| ARISTOCRAT LEISURE |
MACOM Technology and ARISTOCRAT LEISURE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MACOM Technology and ARISTOCRAT LEISURE
The main advantage of trading using opposite MACOM Technology and ARISTOCRAT LEISURE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology position performs unexpectedly, ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE will offset losses from the drop in ARISTOCRAT LEISURE's long position.| MACOM Technology vs. Astral Foods Limited | MACOM Technology vs. TYSON FOODS A | MACOM Technology vs. AUSNUTRIA DAIRY | MACOM Technology vs. EMBARK EDUCATION LTD |
| ARISTOCRAT LEISURE vs. Apple Inc | ARISTOCRAT LEISURE vs. Apple Inc | ARISTOCRAT LEISURE vs. Apple Inc | ARISTOCRAT LEISURE vs. Microsoft |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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