Correlation Between Marvell Technology and Bayer AG
Can any of the company-specific risk be diversified away by investing in both Marvell Technology and Bayer AG 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 Marvell Technology and Bayer AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marvell Technology Group and Bayer AG, you can compare the effects of market volatilities on Marvell Technology and Bayer AG 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 Marvell Technology with a short position of Bayer AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marvell Technology and Bayer AG.
Diversification Opportunities for Marvell Technology and Bayer AG
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Marvell and Bayer is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Marvell Technology Group and Bayer AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayer AG and Marvell Technology 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 Marvell Technology Group are associated (or correlated) with Bayer AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayer AG has no effect on the direction of Marvell Technology i.e., Marvell Technology and Bayer AG go up and down completely randomly.
Pair Corralation between Marvell Technology and Bayer AG
Given the investment horizon of 90 days Marvell Technology Group is expected to generate 0.84 times more return on investment than Bayer AG. However, Marvell Technology Group is 1.2 times less risky than Bayer AG. It trades about 0.18 of its potential returns per unit of risk. Bayer AG is currently generating about -0.22 per unit of risk. If you would invest 6,996 in Marvell Technology Group on August 31, 2024 and sell it today you would earn a total of 2,014 from holding Marvell Technology Group or generate 28.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marvell Technology Group vs. Bayer AG
Performance |
| Timeline |
| Marvell Technology |
| Bayer AG |
Marvell Technology and Bayer AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marvell Technology and Bayer AG
The main advantage of trading using opposite Marvell Technology and Bayer AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marvell Technology position performs unexpectedly, Bayer AG 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 Bayer AG will offset losses from the drop in Bayer AG's long position.| Marvell Technology vs. NVIDIA | Marvell Technology vs. Intel | Marvell Technology vs. Taiwan Semiconductor Manufacturing | Marvell Technology vs. Micron Technology |
| Bayer AG vs. Broadstone Net Lease | Bayer AG vs. Akanda Corp | Bayer AG vs. Alvotech | Bayer AG vs. Aquestive Therapeutics |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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