Correlation Between MACOM Technology and North American
Can any of the company-specific risk be diversified away by investing in both MACOM Technology and North American 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 North American 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 North American Construction, you can compare the effects of market volatilities on MACOM Technology and North American 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 North American. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and North American.
Diversification Opportunities for MACOM Technology and North American
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MACOM and North is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and North American Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North American Const 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 North American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North American Const has no effect on the direction of MACOM Technology i.e., MACOM Technology and North American go up and down completely randomly.
Pair Corralation between MACOM Technology and North American
Assuming the 90 days horizon MACOM Technology is expected to generate 13.96 times less return on investment than North American. But when comparing it to its historical volatility, MACOM Technology Solutions is 1.31 times less risky than North American. It trades about 0.01 of its potential returns per unit of risk. North American Construction is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,040 in North American Construction on October 12, 2024 and sell it today you would earn a total of 80.00 from holding North American Construction or generate 3.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.44% |
| Values | Daily Returns |
MACOM Technology Solutions vs. North American Construction
Performance |
| Timeline |
| MACOM Technology Sol |
| North American Const |
MACOM Technology and North American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MACOM Technology and North American
The main advantage of trading using opposite MACOM Technology and North American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology position performs unexpectedly, North American 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 North American will offset losses from the drop in North American's long position.| MACOM Technology vs. Aya Gold Silver | MACOM Technology vs. Merit Medical Systems | MACOM Technology vs. Peijia Medical Limited | MACOM Technology vs. MEDICAL FACILITIES NEW |
| North American vs. OFFICE DEPOT | North American vs. Aristocrat Leisure Limited | North American vs. LG Display Co | North American vs. Infrastrutture Wireless Italiane |
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 CEOs Directory module to screen CEOs from public companies around the world.
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