Correlation Between Marvell Technology and NLIGHT
Can any of the company-specific risk be diversified away by investing in both Marvell Technology and NLIGHT 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 NLIGHT 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 nLIGHT Inc, you can compare the effects of market volatilities on Marvell Technology and NLIGHT 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 NLIGHT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marvell Technology and NLIGHT.
Diversification Opportunities for Marvell Technology and NLIGHT
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Marvell and NLIGHT is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Marvell Technology Group and nLIGHT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on nLIGHT Inc 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 NLIGHT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of nLIGHT Inc has no effect on the direction of Marvell Technology i.e., Marvell Technology and NLIGHT go up and down completely randomly.
Pair Corralation between Marvell Technology and NLIGHT
Given the investment horizon of 90 days Marvell Technology Group is expected to generate 0.28 times more return on investment than NLIGHT. However, Marvell Technology Group is 3.58 times less risky than NLIGHT. It trades about 0.24 of its potential returns per unit of risk. nLIGHT Inc is currently generating about 0.06 per unit of risk. If you would invest 8,183 in Marvell Technology Group on August 24, 2024 and sell it today you would earn a total of 1,111 from holding Marvell Technology Group or generate 13.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marvell Technology Group vs. nLIGHT Inc
Performance |
| Timeline |
| Marvell Technology |
| nLIGHT Inc |
Marvell Technology and NLIGHT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marvell Technology and NLIGHT
The main advantage of trading using opposite Marvell Technology and NLIGHT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marvell Technology position performs unexpectedly, NLIGHT 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 NLIGHT will offset losses from the drop in NLIGHT's long position.| Marvell Technology vs. Eshallgo Class A | Marvell Technology vs. Amtech Systems | Marvell Technology vs. Gold Fields Ltd | Marvell Technology vs. Aegean Airlines SA |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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