Correlation Between MACOM Technology and Chesapeake Utilities
Can any of the company-specific risk be diversified away by investing in both MACOM Technology and Chesapeake Utilities 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 Chesapeake Utilities 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 Chesapeake Utilities, you can compare the effects of market volatilities on MACOM Technology and Chesapeake Utilities 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 Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and Chesapeake Utilities.
Diversification Opportunities for MACOM Technology and Chesapeake Utilities
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MACOM and Chesapeake is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities 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 Chesapeake Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Utilities has no effect on the direction of MACOM Technology i.e., MACOM Technology and Chesapeake Utilities go up and down completely randomly.
Pair Corralation between MACOM Technology and Chesapeake Utilities
Assuming the 90 days horizon MACOM Technology Solutions is expected to generate 1.6 times more return on investment than Chesapeake Utilities. However, MACOM Technology is 1.6 times more volatile than Chesapeake Utilities. It trades about -0.11 of its potential returns per unit of risk. Chesapeake Utilities is currently generating about -0.24 per unit of risk. If you would invest 13,400 in MACOM Technology Solutions on October 15, 2024 and sell it today you would lose (500.00) from holding MACOM Technology Solutions or give up 3.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MACOM Technology Solutions vs. Chesapeake Utilities
Performance |
| Timeline |
| MACOM Technology Sol |
| Chesapeake Utilities |
MACOM Technology and Chesapeake Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MACOM Technology and Chesapeake Utilities
The main advantage of trading using opposite MACOM Technology and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology position performs unexpectedly, Chesapeake Utilities 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 Chesapeake Utilities will offset losses from the drop in Chesapeake Utilities' long position.| MACOM Technology vs. Alfa Financial Software | MACOM Technology vs. PSI Software AG | MACOM Technology vs. Kingdee International Software | MACOM Technology vs. YATRA ONLINE DL 0001 |
| Chesapeake Utilities vs. Zoom Video Communications | Chesapeake Utilities vs. Charter Communications | Chesapeake Utilities vs. Comba Telecom Systems | Chesapeake Utilities vs. ecotel communication ag |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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