Correlation Between MACOM Technology and GMO Internet
Can any of the company-specific risk be diversified away by investing in both MACOM Technology and GMO Internet 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 GMO Internet 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 GMO Internet, you can compare the effects of market volatilities on MACOM Technology and GMO Internet 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 GMO Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and GMO Internet.
Diversification Opportunities for MACOM Technology and GMO Internet
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MACOM and GMO is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and GMO Internet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMO Internet 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 GMO Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMO Internet has no effect on the direction of MACOM Technology i.e., MACOM Technology and GMO Internet go up and down completely randomly.
Pair Corralation between MACOM Technology and GMO Internet
Assuming the 90 days horizon MACOM Technology Solutions is expected to under-perform the GMO Internet. In addition to that, MACOM Technology is 2.4 times more volatile than GMO Internet. It trades about -0.04 of its total potential returns per unit of risk. GMO Internet is currently generating about 0.11 per unit of volatility. If you would invest 1,620 in GMO Internet on November 1, 2024 and sell it today you would earn a total of 50.00 from holding GMO Internet or generate 3.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MACOM Technology Solutions vs. GMO Internet
Performance |
| Timeline |
| MACOM Technology Sol |
| GMO Internet |
MACOM Technology and GMO Internet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MACOM Technology and GMO Internet
The main advantage of trading using opposite MACOM Technology and GMO Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology position performs unexpectedly, GMO Internet 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 GMO Internet will offset losses from the drop in GMO Internet's long position.| MACOM Technology vs. NVIDIA | MACOM Technology vs. Taiwan Semiconductor Manufacturing | MACOM Technology vs. Broadcom | MACOM Technology vs. QUALCOMM Incorporated |
| GMO Internet vs. BANKINTER ADR 2007 | GMO Internet vs. Alliance Data Systems | GMO Internet vs. Discover Financial Services | GMO Internet vs. Automatic Data Processing |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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