Correlation Between MACOM Technology and Fortrea Holdings
Can any of the company-specific risk be diversified away by investing in both MACOM Technology and Fortrea Holdings 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 Fortrea Holdings 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 Fortrea Holdings, you can compare the effects of market volatilities on MACOM Technology and Fortrea Holdings 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 Fortrea Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and Fortrea Holdings.
Diversification Opportunities for MACOM Technology and Fortrea Holdings
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between MACOM and Fortrea is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and Fortrea Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortrea Holdings 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 Fortrea Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortrea Holdings has no effect on the direction of MACOM Technology i.e., MACOM Technology and Fortrea Holdings go up and down completely randomly.
Pair Corralation between MACOM Technology and Fortrea Holdings
Given the investment horizon of 90 days MACOM Technology is expected to generate 1.52 times less return on investment than Fortrea Holdings. But when comparing it to its historical volatility, MACOM Technology Solutions is 2.0 times less risky than Fortrea Holdings. It trades about 0.23 of its potential returns per unit of risk. Fortrea Holdings is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,685 in Fortrea Holdings on September 2, 2024 and sell it today you would earn a total of 420.00 from holding Fortrea Holdings or generate 24.93% 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. Fortrea Holdings
Performance |
| Timeline |
| MACOM Technology Sol |
| Fortrea Holdings |
MACOM Technology and Fortrea Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MACOM Technology and Fortrea Holdings
The main advantage of trading using opposite MACOM Technology and Fortrea Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology position performs unexpectedly, Fortrea Holdings 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 Fortrea Holdings will offset losses from the drop in Fortrea Holdings' long position.| MACOM Technology vs. NXP Semiconductors NV | MACOM Technology vs. GSI Technology | MACOM Technology vs. MaxLinear | MACOM Technology vs. Texas Instruments Incorporated |
| Fortrea Holdings vs. RBC Bearings Incorporated | Fortrea Holdings vs. KVH Industries | Fortrea Holdings vs. Sphere Entertainment Co | Fortrea Holdings vs. Zedge Inc |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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