Correlation Between InPlay Oil and MACOM Technology
Can any of the company-specific risk be diversified away by investing in both InPlay Oil and MACOM Technology 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 InPlay Oil and MACOM Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InPlay Oil Corp and MACOM Technology Solutions, you can compare the effects of market volatilities on InPlay Oil and MACOM Technology 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 InPlay Oil with a short position of MACOM Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of InPlay Oil and MACOM Technology.
Diversification Opportunities for InPlay Oil and MACOM Technology
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between InPlay and MACOM is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp and MACOM Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MACOM Technology Sol and InPlay Oil 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 InPlay Oil Corp are associated (or correlated) with MACOM Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MACOM Technology Sol has no effect on the direction of InPlay Oil i.e., InPlay Oil and MACOM Technology go up and down completely randomly.
Pair Corralation between InPlay Oil and MACOM Technology
Assuming the 90 days trading horizon InPlay Oil Corp is expected to under-perform the MACOM Technology. But the stock apears to be less risky and, when comparing its historical volatility, InPlay Oil Corp is 1.7 times less risky than MACOM Technology. The stock trades about -0.08 of its potential returns per unit of risk. The MACOM Technology Solutions is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 10,600 in MACOM Technology Solutions on August 24, 2024 and sell it today you would earn a total of 1,900 from holding MACOM Technology Solutions or generate 17.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
InPlay Oil Corp vs. MACOM Technology Solutions
Performance |
| Timeline |
| InPlay Oil Corp |
| MACOM Technology Sol |
InPlay Oil and MACOM Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InPlay Oil and MACOM Technology
The main advantage of trading using opposite InPlay Oil and MACOM Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InPlay Oil position performs unexpectedly, MACOM Technology 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 MACOM Technology will offset losses from the drop in MACOM Technology's long position.The idea behind InPlay Oil Corp and MACOM Technology Solutions pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| MACOM Technology vs. NVIDIA | MACOM Technology vs. NVIDIA | MACOM Technology vs. Taiwan Semiconductor Manufacturing | MACOM Technology vs. QUALCOMM Incorporated |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |