Correlation Between MACOM Technology and Spirent Communications
Can any of the company-specific risk be diversified away by investing in both MACOM Technology and Spirent Communications 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 Spirent Communications 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 Spirent Communications plc, you can compare the effects of market volatilities on MACOM Technology and Spirent Communications 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 Spirent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and Spirent Communications.
Diversification Opportunities for MACOM Technology and Spirent Communications
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MACOM and Spirent is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and Spirent Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirent Communications 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 Spirent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirent Communications has no effect on the direction of MACOM Technology i.e., MACOM Technology and Spirent Communications go up and down completely randomly.
Pair Corralation between MACOM Technology and Spirent Communications
Assuming the 90 days horizon MACOM Technology Solutions is expected to generate 0.52 times more return on investment than Spirent Communications. However, MACOM Technology Solutions is 1.93 times less risky than Spirent Communications. It trades about 0.1 of its potential returns per unit of risk. Spirent Communications plc is currently generating about 0.02 per unit of risk. If you would invest 5,550 in MACOM Technology Solutions on August 31, 2024 and sell it today you would earn a total of 6,950 from holding MACOM Technology Solutions or generate 125.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.74% |
| Values | Daily Returns |
MACOM Technology Solutions vs. Spirent Communications plc
Performance |
| Timeline |
| MACOM Technology Sol |
| Spirent Communications |
MACOM Technology and Spirent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MACOM Technology and Spirent Communications
The main advantage of trading using opposite MACOM Technology and Spirent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology position performs unexpectedly, Spirent Communications 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 Spirent Communications will offset losses from the drop in Spirent Communications' long position.| MACOM Technology vs. Spirent Communications plc | MACOM Technology vs. Charter Communications | MACOM Technology vs. Ribbon Communications | MACOM Technology vs. T MOBILE US |
| Spirent Communications vs. ATT Inc | Spirent Communications vs. Deutsche Telekom AG | Spirent Communications vs. Superior Plus Corp | Spirent Communications vs. NMI Holdings |
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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