Correlation Between Marvell Technology and Cathay Pacific
Can any of the company-specific risk be diversified away by investing in both Marvell Technology and Cathay Pacific 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 Cathay Pacific 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 Cathay Pacific Airways, you can compare the effects of market volatilities on Marvell Technology and Cathay Pacific 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 Cathay Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marvell Technology and Cathay Pacific.
Diversification Opportunities for Marvell Technology and Cathay Pacific
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Marvell and Cathay is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Marvell Technology Group and Cathay Pacific Airways in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay Pacific Airways 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 Cathay Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay Pacific Airways has no effect on the direction of Marvell Technology i.e., Marvell Technology and Cathay Pacific go up and down completely randomly.
Pair Corralation between Marvell Technology and Cathay Pacific
Given the investment horizon of 90 days Marvell Technology Group is expected to generate 1.23 times more return on investment than Cathay Pacific. However, Marvell Technology is 1.23 times more volatile than Cathay Pacific Airways. It trades about 0.06 of its potential returns per unit of risk. Cathay Pacific Airways is currently generating about 0.01 per unit of risk. If you would invest 5,967 in Marvell Technology Group on September 1, 2024 and sell it today you would earn a total of 3,302 from holding Marvell Technology Group or generate 55.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 49.73% |
| Values | Daily Returns |
Marvell Technology Group vs. Cathay Pacific Airways
Performance |
| Timeline |
| Marvell Technology |
| Cathay Pacific Airways |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Marvell Technology and Cathay Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marvell Technology and Cathay Pacific
The main advantage of trading using opposite Marvell Technology and Cathay Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marvell Technology position performs unexpectedly, Cathay Pacific 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 Cathay Pacific will offset losses from the drop in Cathay Pacific's long position.| Marvell Technology vs. NVIDIA | Marvell Technology vs. Intel | Marvell Technology vs. Taiwan Semiconductor Manufacturing | Marvell Technology vs. Micron Technology |
| Cathay Pacific vs. Finnair Oyj | Cathay Pacific vs. easyJet plc | Cathay Pacific vs. Norse Atlantic ASA | Cathay Pacific vs. Air New Zealand |
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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