Correlation Between Globalfoundries and ROHM
Can any of the company-specific risk be diversified away by investing in both Globalfoundries and ROHM 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 Globalfoundries and ROHM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globalfoundries and ROHM Co, you can compare the effects of market volatilities on Globalfoundries and ROHM 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 Globalfoundries with a short position of ROHM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globalfoundries and ROHM.
Diversification Opportunities for Globalfoundries and ROHM
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Globalfoundries and ROHM is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Globalfoundries and ROHM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ROHM and Globalfoundries 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 Globalfoundries are associated (or correlated) with ROHM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ROHM has no effect on the direction of Globalfoundries i.e., Globalfoundries and ROHM go up and down completely randomly.
Pair Corralation between Globalfoundries and ROHM
Considering the 90-day investment horizon Globalfoundries is expected to generate 12.54 times more return on investment than ROHM. However, Globalfoundries is 12.54 times more volatile than ROHM Co. It trades about 0.19 of its potential returns per unit of risk. ROHM Co is currently generating about -0.22 per unit of risk. If you would invest 3,650 in Globalfoundries on September 1, 2024 and sell it today you would earn a total of 675.00 from holding Globalfoundries or generate 18.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globalfoundries vs. ROHM Co
Performance |
| Timeline |
| Globalfoundries |
| ROHM |
Globalfoundries and ROHM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globalfoundries and ROHM
The main advantage of trading using opposite Globalfoundries and ROHM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globalfoundries position performs unexpectedly, ROHM 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 ROHM will offset losses from the drop in ROHM's long position.| Globalfoundries vs. NXP Semiconductors NV | Globalfoundries vs. Analog Devices | Globalfoundries vs. ON Semiconductor | Globalfoundries vs. Lattice Semiconductor |
| ROHM vs. ON Semiconductor | ROHM vs. Monolithic Power Systems | ROHM vs. Navitas Semiconductor Corp | ROHM vs. Globalfoundries |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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