Correlation Between MACOM Technology and Metro AG
Can any of the company-specific risk be diversified away by investing in both MACOM Technology and Metro AG 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 Metro AG 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 Metro AG, you can compare the effects of market volatilities on MACOM Technology and Metro AG 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 Metro AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and Metro AG.
Diversification Opportunities for MACOM Technology and Metro AG
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MACOM and Metro is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and Metro AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro AG 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 Metro AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro AG has no effect on the direction of MACOM Technology i.e., MACOM Technology and Metro AG go up and down completely randomly.
Pair Corralation between MACOM Technology and Metro AG
Assuming the 90 days horizon MACOM Technology Solutions is expected to under-perform the Metro AG. But the stock apears to be less risky and, when comparing its historical volatility, MACOM Technology Solutions is 2.2 times less risky than Metro AG. The stock trades about -0.01 of its potential returns per unit of risk. The Metro AG is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 428.00 in Metro AG on November 7, 2024 and sell it today you would earn a total of 87.00 from holding Metro AG or generate 20.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MACOM Technology Solutions vs. Metro AG
Performance |
| Timeline |
| MACOM Technology Sol |
| Metro AG |
MACOM Technology and Metro AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MACOM Technology and Metro AG
The main advantage of trading using opposite MACOM Technology and Metro AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology position performs unexpectedly, Metro AG 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 Metro AG will offset losses from the drop in Metro AG's long position.| MACOM Technology vs. Japan Medical Dynamic | MACOM Technology vs. PEPTONIC MEDICAL | MACOM Technology vs. Corporate Office Properties | MACOM Technology vs. OFFICE DEPOT |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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