Correlation Between MACOM Technology and Canlan Ice
Can any of the company-specific risk be diversified away by investing in both MACOM Technology and Canlan Ice 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 Canlan Ice 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 Canlan Ice Sports, you can compare the effects of market volatilities on MACOM Technology and Canlan Ice 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 Canlan Ice. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and Canlan Ice.
Diversification Opportunities for MACOM Technology and Canlan Ice
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MACOM and Canlan is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and Canlan Ice Sports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canlan Ice Sports 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 Canlan Ice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canlan Ice Sports has no effect on the direction of MACOM Technology i.e., MACOM Technology and Canlan Ice go up and down completely randomly.
Pair Corralation between MACOM Technology and Canlan Ice
Given the investment horizon of 90 days MACOM Technology Solutions is expected to generate 22.27 times more return on investment than Canlan Ice. However, MACOM Technology is 22.27 times more volatile than Canlan Ice Sports. It trades about 0.11 of its potential returns per unit of risk. Canlan Ice Sports is currently generating about 0.13 per unit of risk. If you would invest 5,485 in MACOM Technology Solutions on August 26, 2024 and sell it today you would earn a total of 7,965 from holding MACOM Technology Solutions or generate 145.21% 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. Canlan Ice Sports
Performance |
| Timeline |
| MACOM Technology Sol |
| Canlan Ice Sports |
MACOM Technology and Canlan Ice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MACOM Technology and Canlan Ice
The main advantage of trading using opposite MACOM Technology and Canlan Ice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology position performs unexpectedly, Canlan Ice 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 Canlan Ice will offset losses from the drop in Canlan Ice's long position.| MACOM Technology vs. Power Integrations | MACOM Technology vs. Diodes Incorporated | MACOM Technology vs. Cirrus Logic | MACOM Technology vs. Amkor Technology |
| Canlan Ice vs. HUMANA INC | Canlan Ice vs. Aquagold International | Canlan Ice vs. Barloworld Ltd ADR | Canlan Ice vs. Morningstar Unconstrained Allocation |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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