Correlation Between Charter Communications and MACOM Technology
Can any of the company-specific risk be diversified away by investing in both Charter Communications 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 Charter Communications and MACOM Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Communications and MACOM Technology Solutions, you can compare the effects of market volatilities on Charter Communications 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 Charter Communications with a short position of MACOM Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and MACOM Technology.
Diversification Opportunities for Charter Communications and MACOM Technology
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Charter and MACOM is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications 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 Charter Communications 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 Charter Communications 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 Charter Communications i.e., Charter Communications and MACOM Technology go up and down completely randomly.
Pair Corralation between Charter Communications and MACOM Technology
Assuming the 90 days trading horizon Charter Communications is expected to generate 1.05 times more return on investment than MACOM Technology. However, Charter Communications is 1.05 times more volatile than MACOM Technology Solutions. It trades about 0.11 of its potential returns per unit of risk. MACOM Technology Solutions is currently generating about 0.1 per unit of risk. If you would invest 26,125 in Charter Communications on September 2, 2024 and sell it today you would earn a total of 10,950 from holding Charter Communications or generate 41.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charter Communications vs. MACOM Technology Solutions
Performance |
| Timeline |
| Charter Communications |
| MACOM Technology Sol |
Charter Communications and MACOM Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Communications and MACOM Technology
The main advantage of trading using opposite Charter Communications and MACOM Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications 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.| Charter Communications vs. Amkor Technology | Charter Communications vs. JAPAN AIRLINES | Charter Communications vs. Aegean Airlines SA | Charter Communications vs. AEGEAN AIRLINES |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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