Correlation Between MACOM Technology and Cass Information
Can any of the company-specific risk be diversified away by investing in both MACOM Technology and Cass Information 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 Cass Information 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 Cass Information Systems, you can compare the effects of market volatilities on MACOM Technology and Cass Information 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 Cass Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and Cass Information.
Diversification Opportunities for MACOM Technology and Cass Information
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MACOM and Cass is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and Cass Information Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cass Information Systems 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 Cass Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cass Information Systems has no effect on the direction of MACOM Technology i.e., MACOM Technology and Cass Information go up and down completely randomly.
Pair Corralation between MACOM Technology and Cass Information
Assuming the 90 days horizon MACOM Technology Solutions is expected to generate 1.94 times more return on investment than Cass Information. However, MACOM Technology is 1.94 times more volatile than Cass Information Systems. It trades about 0.25 of its potential returns per unit of risk. Cass Information Systems is currently generating about 0.19 per unit of risk. If you would invest 10,400 in MACOM Technology Solutions on September 3, 2024 and sell it today you would earn a total of 2,100 from holding MACOM Technology Solutions or generate 20.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MACOM Technology Solutions vs. Cass Information Systems
Performance |
| Timeline |
| MACOM Technology Sol |
| Cass Information Systems |
MACOM Technology and Cass Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MACOM Technology and Cass Information
The main advantage of trading using opposite MACOM Technology and Cass Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology position performs unexpectedly, Cass Information 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 Cass Information will offset losses from the drop in Cass Information's long position.| MACOM Technology vs. Casio Computer CoLtd | MACOM Technology vs. X FAB Silicon Foundries | MACOM Technology vs. FANDIFI TECHNOLOGY P | MACOM Technology vs. AECOM TECHNOLOGY |
| Cass Information vs. Align Technology | Cass Information vs. X FAB Silicon Foundries | Cass Information vs. SMA Solar Technology | Cass Information vs. Casio Computer CoLtd |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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