Correlation Between MACOM Technology and Air New
Can any of the company-specific risk be diversified away by investing in both MACOM Technology and Air New 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 Air New 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 Air New Zealand, you can compare the effects of market volatilities on MACOM Technology and Air New 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 Air New. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and Air New.
Diversification Opportunities for MACOM Technology and Air New
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MACOM and Air is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and Air New Zealand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air New Zealand 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 Air New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air New Zealand has no effect on the direction of MACOM Technology i.e., MACOM Technology and Air New go up and down completely randomly.
Pair Corralation between MACOM Technology and Air New
Assuming the 90 days horizon MACOM Technology Solutions is expected to generate 1.44 times more return on investment than Air New. However, MACOM Technology is 1.44 times more volatile than Air New Zealand. It trades about 0.07 of its potential returns per unit of risk. Air New Zealand is currently generating about -0.01 per unit of risk. If you would invest 6,350 in MACOM Technology Solutions on August 27, 2024 and sell it today you would earn a total of 6,550 from holding MACOM Technology Solutions or generate 103.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MACOM Technology Solutions vs. Air New Zealand
Performance |
| Timeline |
| MACOM Technology Sol |
| Air New Zealand |
MACOM Technology and Air New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MACOM Technology and Air New
The main advantage of trading using opposite MACOM Technology and Air New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology position performs unexpectedly, Air New 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 Air New will offset losses from the drop in Air New'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 |
| Air New vs. THRACE PLASTICS | Air New vs. Plastic Omnium | Air New vs. X FAB Silicon Foundries | Air New vs. MACOM Technology Solutions |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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