Correlation Between MACOM Technology and Alpha
Can any of the company-specific risk be diversified away by investing in both MACOM Technology and Alpha 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 Alpha 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 Alpha and Omega, you can compare the effects of market volatilities on MACOM Technology and Alpha 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 Alpha. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and Alpha.
Diversification Opportunities for MACOM Technology and Alpha
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MACOM and Alpha is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and Alpha and Omega in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha and Omega 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 Alpha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha and Omega has no effect on the direction of MACOM Technology i.e., MACOM Technology and Alpha go up and down completely randomly.
Pair Corralation between MACOM Technology and Alpha
Given the investment horizon of 90 days MACOM Technology is expected to generate 1.32 times less return on investment than Alpha. But when comparing it to its historical volatility, MACOM Technology Solutions is 2.54 times less risky than Alpha. It trades about 0.19 of its potential returns per unit of risk. Alpha and Omega is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,622 in Alpha and Omega on August 27, 2024 and sell it today you would earn a total of 414.00 from holding Alpha and Omega or generate 11.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MACOM Technology Solutions vs. Alpha and Omega
Performance |
| Timeline |
| MACOM Technology Sol |
| Alpha and Omega |
MACOM Technology and Alpha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MACOM Technology and Alpha
The main advantage of trading using opposite MACOM Technology and Alpha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology position performs unexpectedly, Alpha 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 Alpha will offset losses from the drop in Alpha's long position.| MACOM Technology vs. Power Integrations | MACOM Technology vs. Diodes Incorporated | MACOM Technology vs. Cirrus Logic | MACOM Technology vs. Amkor Technology |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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