Correlation Between MACOM Technology and GrafTech International
Can any of the company-specific risk be diversified away by investing in both MACOM Technology and GrafTech International 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 GrafTech International 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 GrafTech International, you can compare the effects of market volatilities on MACOM Technology and GrafTech International 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 GrafTech International. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and GrafTech International.
Diversification Opportunities for MACOM Technology and GrafTech International
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MACOM and GrafTech is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and GrafTech International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GrafTech International 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 GrafTech International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GrafTech International has no effect on the direction of MACOM Technology i.e., MACOM Technology and GrafTech International go up and down completely randomly.
Pair Corralation between MACOM Technology and GrafTech International
Assuming the 90 days horizon MACOM Technology Solutions is expected to generate 0.81 times more return on investment than GrafTech International. However, MACOM Technology Solutions is 1.23 times less risky than GrafTech International. It trades about 0.02 of its potential returns per unit of risk. GrafTech International is currently generating about -0.15 per unit of risk. If you would invest 13,000 in MACOM Technology Solutions on November 8, 2024 and sell it today you would earn a total of 0.00 from holding MACOM Technology Solutions or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
MACOM Technology Solutions vs. GrafTech International
Performance |
| Timeline |
| MACOM Technology Sol |
| GrafTech International |
MACOM Technology and GrafTech International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MACOM Technology and GrafTech International
The main advantage of trading using opposite MACOM Technology and GrafTech International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology position performs unexpectedly, GrafTech International 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 GrafTech International will offset losses from the drop in GrafTech International's long position.| MACOM Technology vs. Beta Systems Software | MACOM Technology vs. SMA Solar Technology | MACOM Technology vs. Take Two Interactive Software | MACOM Technology vs. SEALED AIR |
| GrafTech International vs. Vulcan Materials | GrafTech International vs. Marie Brizard Wine | GrafTech International vs. Summit Materials | GrafTech International vs. Sunny Optical Technology |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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