Correlation Between MACOM Technology and NVIDIA
Can any of the company-specific risk be diversified away by investing in both MACOM Technology and NVIDIA 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 NVIDIA 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 NVIDIA, you can compare the effects of market volatilities on MACOM Technology and NVIDIA 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 NVIDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and NVIDIA.
Diversification Opportunities for MACOM Technology and NVIDIA
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between MACOM and NVIDIA is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and NVIDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVIDIA 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 NVIDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NVIDIA has no effect on the direction of MACOM Technology i.e., MACOM Technology and NVIDIA go up and down completely randomly.
Pair Corralation between MACOM Technology and NVIDIA
Assuming the 90 days horizon MACOM Technology Solutions is expected to generate 1.23 times more return on investment than NVIDIA. However, MACOM Technology is 1.23 times more volatile than NVIDIA. It trades about 0.21 of its potential returns per unit of risk. NVIDIA is currently generating about 0.16 per unit of risk. If you would invest 9,700 in MACOM Technology Solutions on September 3, 2024 and sell it today you would earn a total of 2,800 from holding MACOM Technology Solutions or generate 28.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MACOM Technology Solutions vs. NVIDIA
Performance |
| Timeline |
| MACOM Technology Sol |
| NVIDIA |
MACOM Technology and NVIDIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MACOM Technology and NVIDIA
The main advantage of trading using opposite MACOM Technology and NVIDIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology position performs unexpectedly, NVIDIA 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 NVIDIA will offset losses from the drop in NVIDIA's 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 |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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