Correlation Between MACOM Technology and Genuine Parts
Can any of the company-specific risk be diversified away by investing in both MACOM Technology and Genuine Parts 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 Genuine Parts 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 Genuine Parts, you can compare the effects of market volatilities on MACOM Technology and Genuine Parts 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 Genuine Parts. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and Genuine Parts.
Diversification Opportunities for MACOM Technology and Genuine Parts
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MACOM and Genuine is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and Genuine Parts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genuine Parts 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 Genuine Parts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genuine Parts has no effect on the direction of MACOM Technology i.e., MACOM Technology and Genuine Parts go up and down completely randomly.
Pair Corralation between MACOM Technology and Genuine Parts
Assuming the 90 days horizon MACOM Technology Solutions is expected to generate 1.66 times more return on investment than Genuine Parts. However, MACOM Technology is 1.66 times more volatile than Genuine Parts. It trades about 0.25 of its potential returns per unit of risk. Genuine Parts is currently generating about 0.33 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MACOM Technology Solutions vs. Genuine Parts
Performance |
| Timeline |
| MACOM Technology Sol |
| Genuine Parts |
MACOM Technology and Genuine Parts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MACOM Technology and Genuine Parts
The main advantage of trading using opposite MACOM Technology and Genuine Parts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology position performs unexpectedly, Genuine Parts 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 Genuine Parts will offset losses from the drop in Genuine Parts' 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 |
| Genuine Parts vs. The Hanover Insurance | Genuine Parts vs. Check Point Software | Genuine Parts vs. MACOM Technology Solutions | Genuine Parts vs. PT Bank Maybank |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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