Correlation Between MACOM Technology and FormFactor
Can any of the company-specific risk be diversified away by investing in both MACOM Technology and FormFactor 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 FormFactor 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 FormFactor, you can compare the effects of market volatilities on MACOM Technology and FormFactor 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 FormFactor. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and FormFactor.
Diversification Opportunities for MACOM Technology and FormFactor
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MACOM and FormFactor is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and FormFactor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FormFactor 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 FormFactor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FormFactor has no effect on the direction of MACOM Technology i.e., MACOM Technology and FormFactor go up and down completely randomly.
Pair Corralation between MACOM Technology and FormFactor
Given the investment horizon of 90 days MACOM Technology Solutions is expected to generate 0.98 times more return on investment than FormFactor. However, MACOM Technology Solutions is 1.02 times less risky than FormFactor. It trades about 0.17 of its potential returns per unit of risk. FormFactor is currently generating about -0.04 per unit of risk. If you would invest 11,557 in MACOM Technology Solutions on August 24, 2024 and sell it today you would earn a total of 1,576 from holding MACOM Technology Solutions or generate 13.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MACOM Technology Solutions vs. FormFactor
Performance |
| Timeline |
| MACOM Technology Sol |
| FormFactor |
MACOM Technology and FormFactor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MACOM Technology and FormFactor
The main advantage of trading using opposite MACOM Technology and FormFactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology position performs unexpectedly, FormFactor 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 FormFactor will offset losses from the drop in FormFactor's long position.| MACOM Technology vs. Power Integrations | MACOM Technology vs. Diodes Incorporated | MACOM Technology vs. Cirrus Logic | MACOM Technology vs. Amkor Technology |
| FormFactor vs. Silicon Laboratories | FormFactor vs. Diodes Incorporated | FormFactor vs. MACOM Technology Solutions | FormFactor 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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