Correlation Between CMC Magnetics and VIA Technologies
Can any of the company-specific risk be diversified away by investing in both CMC Magnetics and VIA Technologies 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 CMC Magnetics and VIA Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CMC Magnetics Corp and VIA Technologies, you can compare the effects of market volatilities on CMC Magnetics and VIA Technologies 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 CMC Magnetics with a short position of VIA Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMC Magnetics and VIA Technologies.
Diversification Opportunities for CMC Magnetics and VIA Technologies
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CMC and VIA is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding CMC Magnetics Corp and VIA Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIA Technologies and CMC Magnetics 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 CMC Magnetics Corp are associated (or correlated) with VIA Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIA Technologies has no effect on the direction of CMC Magnetics i.e., CMC Magnetics and VIA Technologies go up and down completely randomly.
Pair Corralation between CMC Magnetics and VIA Technologies
Assuming the 90 days trading horizon CMC Magnetics Corp is expected to generate 0.59 times more return on investment than VIA Technologies. However, CMC Magnetics Corp is 1.69 times less risky than VIA Technologies. It trades about 0.01 of its potential returns per unit of risk. VIA Technologies is currently generating about -0.01 per unit of risk. If you would invest 1,155 in CMC Magnetics Corp on September 1, 2024 and sell it today you would lose (30.00) from holding CMC Magnetics Corp or give up 2.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.62% |
| Values | Daily Returns |
CMC Magnetics Corp vs. VIA Technologies
Performance |
| Timeline |
| CMC Magnetics Corp |
| VIA Technologies |
CMC Magnetics and VIA Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMC Magnetics and VIA Technologies
The main advantage of trading using opposite CMC Magnetics and VIA Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMC Magnetics position performs unexpectedly, VIA Technologies 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 VIA Technologies will offset losses from the drop in VIA Technologies' long position.| CMC Magnetics vs. Ritek Corp | CMC Magnetics vs. Macronix International Co | CMC Magnetics vs. Winbond Electronics Corp | CMC Magnetics vs. Compal Electronics |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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