Correlation Between Infineon Technologies and MACOM Technology
Can any of the company-specific risk be diversified away by investing in both Infineon Technologies 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 Infineon Technologies and MACOM Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Infineon Technologies AG and MACOM Technology Solutions, you can compare the effects of market volatilities on Infineon Technologies 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 Infineon Technologies with a short position of MACOM Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infineon Technologies and MACOM Technology.
Diversification Opportunities for Infineon Technologies and MACOM Technology
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Infineon and MACOM is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Infineon Technologies AG 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 Infineon 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 Infineon Technologies AG 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 Infineon Technologies i.e., Infineon Technologies and MACOM Technology go up and down completely randomly.
Pair Corralation between Infineon Technologies and MACOM Technology
Assuming the 90 days horizon Infineon Technologies is expected to generate 17.45 times less return on investment than MACOM Technology. But when comparing it to its historical volatility, Infineon Technologies AG is 1.02 times less risky than MACOM Technology. It trades about 0.0 of its potential returns per unit of risk. MACOM Technology Solutions is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 8,245 in MACOM Technology Solutions on November 4, 2024 and sell it today you would earn a total of 4,980 from holding MACOM Technology Solutions or generate 60.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Infineon Technologies AG vs. MACOM Technology Solutions
Performance |
| Timeline |
| Infineon Technologies |
| MACOM Technology Sol |
Infineon Technologies and MACOM Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Infineon Technologies and MACOM Technology
The main advantage of trading using opposite Infineon Technologies and MACOM Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Infineon Technologies 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 Infineon Technologies AG 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.
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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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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