Correlation Between VIA Technologies and CMC Magnetics
Can any of the company-specific risk be diversified away by investing in both VIA Technologies and CMC Magnetics 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 VIA Technologies and CMC Magnetics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VIA Technologies and CMC Magnetics Corp, you can compare the effects of market volatilities on VIA Technologies and CMC Magnetics 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 VIA Technologies with a short position of CMC Magnetics. Check out your portfolio center. Please also check ongoing floating volatility patterns of VIA Technologies and CMC Magnetics.
Diversification Opportunities for VIA Technologies and CMC Magnetics
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between VIA and CMC is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding VIA Technologies and CMC Magnetics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMC Magnetics Corp and VIA Technologies 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 VIA Technologies are associated (or correlated) with CMC Magnetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMC Magnetics Corp has no effect on the direction of VIA Technologies i.e., VIA Technologies and CMC Magnetics go up and down completely randomly.
Pair Corralation between VIA Technologies and CMC Magnetics
Assuming the 90 days trading horizon VIA Technologies is expected to generate 1.66 times more return on investment than CMC Magnetics. However, VIA Technologies is 1.66 times more volatile than CMC Magnetics Corp. It trades about 0.02 of its potential returns per unit of risk. CMC Magnetics Corp is currently generating about 0.03 per unit of risk. If you would invest 8,540 in VIA Technologies on November 27, 2024 and sell it today you would earn a total of 1,010 from holding VIA Technologies or generate 11.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VIA Technologies vs. CMC Magnetics Corp
Performance |
| Timeline |
| VIA Technologies |
| CMC Magnetics Corp |
VIA Technologies and CMC Magnetics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VIA Technologies and CMC Magnetics
The main advantage of trading using opposite VIA Technologies and CMC Magnetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VIA Technologies position performs unexpectedly, CMC Magnetics 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 CMC Magnetics will offset losses from the drop in CMC Magnetics' long position.| VIA Technologies vs. United Microelectronics | VIA Technologies vs. Silicon Integrated Systems | VIA Technologies vs. Winbond Electronics Corp | VIA Technologies vs. Macronix International Co |
| 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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