Correlation Between MACOM Technology and Allient
Can any of the company-specific risk be diversified away by investing in both MACOM Technology and Allient 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 MACOM Technology and Allient into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MACOM Technology Solutions and Allient, you can compare the effects of market volatilities on MACOM Technology and Allient 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 MACOM Technology with a short position of Allient. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and Allient.
Diversification Opportunities for MACOM Technology and Allient
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MACOM and Allient is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and Allient in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allient and MACOM 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 MACOM Technology Solutions are associated (or correlated) with Allient. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allient has no effect on the direction of MACOM Technology i.e., MACOM Technology and Allient go up and down completely randomly.
Pair Corralation between MACOM Technology and Allient
Given the investment horizon of 90 days MACOM Technology Solutions is expected to generate 0.81 times more return on investment than Allient. However, MACOM Technology Solutions is 1.23 times less risky than Allient. It trades about 0.09 of its potential returns per unit of risk. Allient is currently generating about 0.01 per unit of risk. If you would invest 8,770 in MACOM Technology Solutions on September 4, 2024 and sell it today you would earn a total of 5,333 from holding MACOM Technology Solutions or generate 60.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MACOM Technology Solutions vs. Allient
Performance |
| Timeline |
| MACOM Technology Sol |
| Allient |
MACOM Technology and Allient Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MACOM Technology and Allient
The main advantage of trading using opposite MACOM Technology and Allient positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology position performs unexpectedly, Allient 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 Allient will offset losses from the drop in Allient's long position.| MACOM Technology vs. NXP Semiconductors NV | MACOM Technology vs. Analog Devices | MACOM Technology vs. Monolithic Power Systems | MACOM Technology vs. ON Semiconductor |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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