Correlation Between Marvell Technology and SDX Energy
Can any of the company-specific risk be diversified away by investing in both Marvell Technology and SDX Energy 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 SDX Energy 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 SDX Energy plc, you can compare the effects of market volatilities on Marvell Technology and SDX Energy 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 SDX Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marvell Technology and SDX Energy.
Diversification Opportunities for Marvell Technology and SDX Energy
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Marvell and SDX is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Marvell Technology Group and SDX Energy plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SDX Energy plc 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 SDX Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SDX Energy plc has no effect on the direction of Marvell Technology i.e., Marvell Technology and SDX Energy go up and down completely randomly.
Pair Corralation between Marvell Technology and SDX Energy
Given the investment horizon of 90 days Marvell Technology is expected to generate 6.98 times less return on investment than SDX Energy. But when comparing it to its historical volatility, Marvell Technology Group is 13.6 times less risky than SDX Energy. It trades about 0.22 of its potential returns per unit of risk. SDX Energy plc is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1.92 in SDX Energy plc on August 29, 2024 and sell it today you would earn a total of 0.08 from holding SDX Energy plc or generate 4.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marvell Technology Group vs. SDX Energy plc
Performance |
| Timeline |
| Marvell Technology |
| SDX Energy plc |
Marvell Technology and SDX Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marvell Technology and SDX Energy
The main advantage of trading using opposite Marvell Technology and SDX Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marvell Technology position performs unexpectedly, SDX Energy 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 SDX Energy will offset losses from the drop in SDX Energy's long position.The idea behind Marvell Technology Group and SDX Energy plc 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.| SDX Energy vs. Permian Resources | SDX Energy vs. Devon Energy | SDX Energy vs. EOG Resources | SDX Energy vs. Coterra Energy |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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